Tax Free Childcare

The tax part of tax free childcare assumes that you are a basic rate tax payer, and also ignores national insurance, or student loans (if you have them). For people that are higher rate tax payers or have student loans to pay, this won't feel like tax free childcare. It's best to ignore the name and focus on the fact that the govenment wants to pay 20% of your childcare bill (up to a limit, see the calculator above).

Tax free childcare eligibility normally means you are also eligible for 15/30 hours of funded childcare, depending on the age of your child. If you are claiming Universal Credit or Tax Credits, then the childcare support you can get is likely better than tax free childcare, and you can't claim both at once. Increasingly few parents will have access to childcare vouchers which closed to new applicants in 2018, but if you think you might be better off with tax free childcare use our childcare vouchers calculator to compare.

If you have pre-school aged children, then tax free childcare can help significantly with your bill. However, it is still available for school aged children, whether it's holiday clubs, wrap around childcare or breakfast/after school clubs. The childcare you are using simply has to be registered with the scheme; so ensure you ask your provider!

There is a £500 top up cap (non-transferable)* each quarter for non-disabled children (£1,000 for disabled children) so if your bills will be seasonal, it may be worth topping up more in months when you use less childcare to get maximal savings for the months where you need more. Since the tax free childcare amount has been fixed since it was introduced in Autumn 2015, inflation means that more and more childcare bills exceed the monthly amount that would fully optimise the limits; £833.33 per month. If your bills are higher than this, using this calculator may help you to ensure you receive your full £500 per three months.

*If you don't use your full £500 in a three month entitlement period, it doesn't carry over to the next.

Ensure you don't wait until the day your invoice is due to top up your account. It normally takes a few hours, or even up to 24 hours for the government top up to show up. If you've used our top-up calculator to work out exactly how much you need to top up, you can always schedule your payment to your provider for the following day knowing that the government top up will be there in time.