What Is Tax-Free Childcare? (UK 2025/26)

Tax-Free Childcare is a UK government scheme that helps working parents pay for childcare. For every £8 you put into a special online childcare account, the government adds £2 — effectively a 25% discount on childcare costs. The maximum top-up is £2,000 per child per year (£4,000 for disabled children), meaning you need to deposit £8,000 to receive the full benefit.

Eligibility

Both parents (or the sole parent in a single-parent household) must be working and earning at least the equivalent of 16 hours per week at the National Minimum Wage — approximately £10,158 per year for 2025/26. Crucially, neither parent's adjusted net income can exceed £100,000. This is the same cliff-edge threshold used for the 30 hours free childcare scheme.

The £100k Problem

If either parent's adjusted net income crosses £100,000, the family loses all Tax-Free Childcare — not gradually, but completely. Combined with losing the personal allowance taper and free childcare hours, this makes £100,000 one of the most punitive thresholds in the UK tax system for parents.

How to Use It

You open a Tax-Free Childcare account through GOV.UK. You can use the funds to pay any Ofsted-registered childcare provider, including nurseries, childminders, after-school clubs, and holiday schemes. The account covers children up to age 11 (17 for disabled children).