Tax-Free Childcare & Free Hours: A Complete Guide for Parents (2026/27)

What Is Tax-Free Childcare?

Tax-Free Childcare is a government scheme that helps working parents pay for childcare. For every £8 you pay into your childcare account, the government adds £2 — meaning you get 20% off your childcare costs, up to a maximum of £2,000 per child per year (or £4,000 for disabled children).

This can save you thousands on nurseries, childminders, after-school clubs, and holiday clubs.

How Tax-Free Childcare Works

1.Open a Tax-Free Childcare account through the government's Childcare Choices website

2.Pay money into the account — for every £8 you add, the government tops up £2

3.Pay your childcare provider directly from the account

4.The maximum government contribution is £500 per quarter (£2,000 per year) per child

Example

If your monthly nursery fees are £1,000:

•You pay £800 into your account

•The government adds £200

•You save £2,400 per year

Who Can Use Tax-Free Childcare?

Both parents (or the sole parent in a single-parent family) must:

•Be working (employed or self-employed)

•Earn at least the National Minimum Wage for 16 hours per week (about £8,580/year for those aged 21+)

•Earn no more than £100,000 per year each

•Not be receiving Universal Credit, Tax Credits, or childcare vouchers

Your child must be under 12 (or under 17 if disabled).

During Maternity Leave

Important: You can still be eligible for Tax-Free Childcare while on maternity leave, as long as the other parent is working and meets the criteria. The parent on maternity leave is treated as meeting the work requirement for the first 31 weeks.

Free Childcare Hours

In addition to Tax-Free Childcare, the government provides free childcare hours:

All 3-4 Year Olds

•15 hours per week (570 hours per year) of free early education

•Universal — available to all families, regardless of income

•Term-time only (38 weeks)

Working Parents of 3-4 Year Olds

•30 hours per week (1,140 hours per year) of free childcare

•Both parents must be working and earning at least the NMW for 16 hours/week

•Neither parent can earn over £100,000

•Term-time only (or fewer hours spread across more weeks)

2 Year Olds

•15 hours per week of free childcare from April 2024

•Available to working parents meeting the same criteria as 30 hours

9 Months to 2 Years

•15 hours per week from September 2024

•For working families meeting the same eligibility criteria

•30 hours from September 2025 for all eligible age groups

How to Apply

Tax-Free Childcare

1.Go to childcarechoices.gov.uk

2.Check your eligibility

3.Create a Government Gateway account

4.Apply for Tax-Free Childcare

5.Set up your childcare account

6.Reconfirm your eligibility every 3 months

Free Hours

1.Apply through childcarechoices.gov.uk

2.Receive a 30-hour code (valid for the next term)

3.Give the code to your childcare provider

4.Reconfirm every 3 months to keep your code valid

Tax-Free Childcare vs Childcare Vouchers

The older Childcare Voucher scheme closed to new applicants in October 2018, but some parents are still using it. Here's how they compare:

Tax-Free Childcare is still available and offers savings of up to £2,000 per child per year. It works for multiple children (the limit applies per child), is available to self-employed parents, and each parent must earn under £100,000.

Childcare Vouchers are closed to new joiners but existing members can continue. Savings are up to £933 per year for basic-rate taxpayers, with the same limit applying across all children. The scheme is not available to the self-employed, but there is no upper income limit.

If you're still on Childcare Vouchers, check whether switching to Tax-Free Childcare would save you more — particularly if you have more than one child in childcare. Be aware that you can't switch back to vouchers once you move to Tax-Free Childcare.

Tax-Free Childcare vs Universal Credit Childcare Support

You cannot receive Tax-Free Childcare and Universal Credit childcare support at the same time — you must choose one. Here's how they differ:

Universal Credit childcare element covers up to 85% of childcare costs, up to £1,014.63/month for one child or £1,739.37/month for two or more children. You need to pay the costs upfront and claim them back, and both parents must be working (or have an accepted reason for not working).

Tax-Free Childcare tops up your payments by 20%, giving you up to £2,000/year per child (£4,000 for disabled children). You pay into an online account and the government adds the top-up automatically.

For most families on Universal Credit, the Universal Credit childcare element is more generous because it covers a higher proportion of costs. However, Tax-Free Childcare may be better if you're not eligible for Universal Credit or if you have high childcare costs for multiple children. Use a benefits calculator to compare your options, and see our financial planning guide for help budgeting.

Planning for Childcare Costs After Maternity Leave

Start researching childcare options before your maternity leave ends:

•Register early — many nurseries have waiting lists of 6-12 months

•Compare costs in your area using the Family and Childcare Trust survey

•Apply for Tax-Free Childcare or free hours before you need them

•Factor childcare costs into your return-to-work financial plan

Use our childcare costs guide for detailed budgeting advice.

Related Guides

•Childcare Costs After Maternity Leave — budgeting for nursery and childminders

•Returning to Work After Maternity — planning your return

•Child Benefit Calculator — calculate your weekly payments