MORE families than ever are using Tax-Free Childcare to save on their childcare bills as the government funded almost £600 million in Tax-Free Childcare top up payments in 2025-26.
Latest figures show a record 868,095 families are benefitting from the scheme and saved thousands on their childcare last year , as HM Revenue and Customs (HMRC) encourages families to sign up to save ahead of the summer holidays.
Tax-Free Childcare is a government funded top-up scheme to be used to pay for approved childcare for children aged 11 or under, or up to 16 years old if the child has a disability. Working parents can save up to £2,000 annually per year per child or £4,000 if their child is disabled.
HMRC’S Chief Customer Officer Myrtle Lloyd said:
“I’m so pleased these figures show more families than ever are using Tax-Free Childcare to save on their bills. £2,000 is not a small amount and it can make a real difference – especially with the childcare void of the summer holidays approaching. If you haven’t signed up yet, don’t miss out, go to GOV.UK to do it today.”
Once a Tax-Free Childcare account is open, for every £8 deposited by parents, the government tops it up by £2. Parents can receive up to £500 (or £1,000 if their child is disabled) every 3 months to help pay their childcare costs.
The funds can be used to pay for any approved childcare – before or after-school clubs, a childminder or an activity club during the holidays. It can also be used to pay for any specialist equipment a childcare provider may need for a disabled child.
Families could be eligible for Tax-Free Childcare if:
they have a child or children aged 11 or under. They stop being eligible on 1 September after their 11th birthday. If their child has a disability, they receive up to £4,000 a year until 1 September after their 16th birthday
the parent and their partner (if they have one) earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average
each earn no more than £100,000 per annum
do not receive Universal Credit or childcare vouchers
Families can check their eligibility and apply on GOV.UK.
Tax-Free Childcare can be used with the free childcare hours offer as long as eligibility is met.
