Tax-Free Childcare scheme
The government's new Tax-Free Childcare scheme enables eligible working families to save 20% of their childcare costs. It is available for working parents with children under 12 (or under 17 for children with a disability).
Below is a list of our most frequently asked questions about the scheme. You can find additional information about Tax-Free Childcare on the gov.uk website.
- Who is eligible to use the scheme?
- How much can I save?
- How can I register for the scheme?
- If my circumstances change will I be able to withdraw the money from the account?
- Will the new scheme replace childcare vouchers?
- Would I be better off using Tax-Free Childcare instead of childcare vouchers?
- Can my childcare provider register for the scheme if they already accept childcare vouchers?
Who is eligible to use the scheme?
The scheme is available for working families where:
- both parents are in work or it is a single parent household
- each parent earns at least the National Minimum Wage or Living Wage for 16 hours a week and no more than £100,000 a year
- parents aren't already receiving support through Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers.
It can also be used by parents who are:
- self-employed (newly self-employed parents will not have to earn the minimum income levels during their 'start-up' period)
- on paid sick leave
- on paid or unpaid statutory maternity, paternity or adoption leave
If you're not working, you may still be eligible if your partner is working, and you get Incapacity Benefit, Severe Disablement Allowance, Carer's Allowance or Employment and Support Allowance.
How much can I save?
For every £8 you or someone else pays in to the account the government will add another £2 up to a maximum of £2,000 per child per year (or £4,000 for children with a disability). This means that families will receive an extra £20 for every £80 they save towards childcare costs, totalling £100.
How can I register for the scheme?
You can apply for the scheme through the government's Childcare Choices website. You, and your partner, if you have one, will need your:
- National insurance number (s).
- Details of one or more of the following - your UK Passport, tax credits, P60 or a recent payslip.
In some cases, additional checks may be needed to confirm whether you're eligible. If you are found ineligible you will be told why.
Once you have opened your account it can be used to pay in money to use towards your childcare costs with a childcare provider who has also registered for the scheme. Grandparents, other family members and employers will also be able to pay into the account if they choose.
If my circumstances change will I be able to withdraw the money from the account?
If your circumstances change or you no longer want to pay into the account you will be able to withdraw the money you have saved. However, the government will withdraw its contribution towards your savings as you will no longer be eligible to receive it
Will the new scheme replace childcare vouchers?
Parents will no longer be able to newly register for childcare vouchers after October 2018. However, if you are already using childcare vouchers you can choose to continue to use these instead of joining the new scheme.
Would I be better off using Tax-Free Childcare instead of childcare vouchers?
This would depend on factors such as how much you earn, what your childcare costs are and the age of your children. However, if you use the childcare calculator on the gov.uk website it can give you an estimate of each scheme to help you make a comparison between them.
Can my childcare provider register for the scheme if they already accept childcare vouchers?
While parents can't make payments using both Tax-Free Childcare and childcare vouchers, childcare providers who are signed up to Tax-Free Childcare are able to receive payments from both schemes.