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.
