Tax Free Childcare

Tax-Free Childcare can be a fantastic way to reduce the cost of childcare for you and your family. However, we understand that the process can feel a bit overwhelming at first.

That’s why we’ve created a simple, step-by-step guide to help you get started. In this guide, we’ll walk you through what Tax-Free Childcare is, how it works, how to apply, and how to make payments for your childcare.

Tax-Free Childcare is a government initiative designed to help working parents with childcare costs.

To take part, you’ll need to open an online account through the GOV.UK website. This account allows you to pay for childcare with a registered provider, and for every 80p you (or someone else) pays in, the government will add an extra 20p. This is the equivalent of the tax rate most people pay—20%, which is where the scheme gets its name.

The government will contribute 20% of your childcare costs, up to a maximum of £10,000. This means you could receive up to £2,000 in support per child, per year—or up to £4,000 for children with disabilities.

The great news is that if you’re eligible, you can apply for funding for all of your children at once, as long as they live with you and meet the age requirements. This includes adopted children, who are also eligible. Children must be under 12 years old, but for those with disabilities, the age limit extends to 17, as their childcare costs often remain higher for longer.

Your chosen childcare provider needs to be approved by the government for you to be able to pay them with your Tax-Free account.

The accepted types of childcare providers are:

• Registered childminder, nanny playscheme, nursery or club
• Childminder or nanny from a registered childminder agency or childcare agency
• Registered school
• Home care worker working for a registered home care agency

The rules about how childcare providers become approved are different depending on where you live. You can check if a childcare provider is approved or search for one in:

• England - through Ofsted or the list of registered childminder agencies
• Wales - through Care Inspectorate Wales
• Scotland - through the Scottish Care Inspectorate
• Northern Ireland - through the local early years team register

If you want to claim 30 hours funded childcare in England, your chosen provider must be registered on the Early Years Register with Ofsted or with a registered early years childminder agency. It’s best to check directly with your provider to make sure they’re eligible.

Once your application is approved, you can start paying your provider tax-free using your government childcare account. Simply log in to your account here. After your payment appears as ‘cleared funds’, you can transfer it to your provider. Payments usually appear in the provider’s account within 24 hours, depending on their bank.