HMRC runs a scheme through which working parents earning below £100,000 may be eligible for Tax-Free Childcare – and it could be worth up to £2,000 per child to help reduce childcare costs
HMRC has confirmed working parents across the UK could be in line for boosts of up to £2,000 – per child. The Labour Party government’s tax arm operates a scheme through which many of those earning below £100,000 may be eligible for Tax-Free Childcare.
It is designed to help families cut their childcare costs. In addition to earning beneath the aforementioned threshold, you will qualify if you have a child aged under 11, or under 16 if your child has a disability.
The savings can be used towards school clubs, childminders and other wraparound childcare provision. A recent post on X, formerly Twitter, from the official GOV UK account explains: “The government adds £2 for every £8 you pay in, up to £2,000 a year per child (or up to £4,000 if your child is disabled).”
The post adds that parents can apply online to open a childcare account and must reconfirm their eligibility every three months. The scheme is worth up to £2,000 per child each year, or up to £4,000 for children with additional needs, reports Birmingham Live.
Once a Tax-Free Childcare account has been established for each child, the government contributes an extra £2 for every £8 deposited.
According to the most recent figures, 602,000 families were making use of Tax-Free Childcare for 745,000 children in June 2026. Families can select from thousands of childcare providers that now accept Tax-Free Childcare as a form of payment, including wraparound care or childminders for arrangements during term time, or holiday clubs and activities throughout school breaks.
- Once an account has been set up, parents can deposit money to use immediately or leave it in the account until required.
- Once you have a childcare account, you can transfer money into your account by Direct Debit, standing order or bank transfer.
- Your payment will typically appear in your childcare account within one working day. The government’s contribution is added at the same time.
- You can then pay your childcare provider.
- You must log in to your childcare account every 3 months to confirm you’re still eligible. If you do not, your Tax-Free Childcare will cease.