Tax-Free Childcare scheme 


A new government scheme to help working parents with the cost of childcare, Tax-Free Childcare, was launched in April 2017 and gradually rolled out to all parents during 2017. For every £8 a parent pays in to an online account to pay for childcare from a registered childcare provider, the government pays £2. Parents can receive up to £2,000 a year per child up to the age of 12 (£4,000 for disabled children up to the age of 17). 


Parents must be in work or getting parental leave, sick leave or annual leave, and earning at least the National Minimum Wage or Living Wage. For 16 hours a week this is £125.28 if you are over 25. If either parent has a taxable income of over £100,000 they are not eligible.


The child must be 11 or under and usually live with you. They stop being eligible on 1 September after their 11th birthday. Adopted children are eligible for tax-free childcare, but foster children are not.


You may get up to £4,000 a year for a disabled child until they are 17 if they get DLA, PIP or AFIP, or are registered as blind or severely sight-impaired.


Your childcare provider must be signed up to the scheme.


You cannot get tax-free childcare at the same time as claiming WTC, CTC, UC or childcare vouchers. If you successfully apply for tax-free childcare, WTC or CTC stops straight away, but childcare vouchers can continue for up to 90 days. You should apply for tax-free childcare before cancelling your UC claim.


From 6 April 2018, employer childcare voucher schemes close to new applicants. You can keep getting vouchers if have joined a scheme and get your first voucher by 5 April 2018, as long as you stay with the same employer and they continue to run the scheme and you do not take an unpaid career break of longer than a year.


You cannot continue to claim childcare vouchers if you successfully apply for tax-free childcare. You must tell your employer within 90 days if you get tax-free childcare and they will then stop giving you new vouchers.


You can continue to use any vouchers you already have, including to make a joint payment for childcare with tax-free childcare. There is no deadline for using the vouchers.


Once you have told your employer that you are getting tax-free childcare, you cannot rejoin their voucher scheme.