Tax-Free Childcare 2026 — Calculator & Complete Guide
Estimate your government top-up, check eligibility, compare with childcare vouchers, and learn exactly how to open and manage your HMRC childcare account.
How Tax-Free Childcare Works — The 80/20 Rule
Tax-Free Childcare is administered by HMRC through an online childcare account at gov.uk/tax-free-childcare. For every £8 you pay in, the government automatically adds £2 — making your effective cost 80p for every £1 of childcare.
The top-up is applied automatically — there is no claim form. Once you have paid into your account, the government contribution appears alongside your payment, and you use the combined balance to pay your registered childcare provider directly.
Annual and quarterly top-up limits
| Child type | Age limit | Max top-up per quarter | Max top-up per year | Childcare spend to hit cap |
|---|---|---|---|---|
| Standard child | Under 12 | £500 | £2,000 | £8,000/yr |
| Disabled child | Under 17 | £1,000 | £4,000 | £16,000/yr |
The cap is per child. A family with two non-disabled children could receive up to £4,000 in top-ups per year (2 × £2,000), requiring £16,000 of qualifying childcare spend to hit both caps.
Tax-Free Childcare Eligibility 2026 — Full Rules
Working requirement — minimum earnings
Each parent (or the sole parent in a single-parent household) must expect to earn at least £2,643 per quarter (2026/27) — approximately £203 per week or £881 per month. This is the equivalent of 16 hours per week at the National Living Wage.
There is no maximum earnings requirement — except that neither parent can have an adjusted net income above £100,000. There is also no minimum hours threshold; part-time workers earning above £2,643 per quarter qualify.
Self-employed parents
Self-employed parents are eligible. If you started your business less than 12 months ago, the minimum earnings requirement does not apply — you can claim TFC regardless of your current earnings. You will need your Unique Taxpayer Reference (UTR) to apply.
If your income fluctuates month-to-month, you can use your expected average earnings over the current tax year rather than the next 3 months. For example, if you expect to earn £12,000 this tax year (£3,000/quarter on average), you qualify even if the next 3 months look lean.
The £100,000 cliff edge
If either parent has an adjusted net income of £100,000 or more, the household is not eligible for TFC. This is a hard cliff edge — there is no taper. Adjusted net income is your total taxable income minus pension contributions, Gift Aid donations, and certain other reliefs.
💡 Salary sacrifice can bring income below £100,000
If your gross salary is £105,000 but you salary sacrifice £6,000 into your workplace pension, your adjusted net income falls to £99,000 — below the threshold. This is a legitimate tax planning approach. Similarly, Gift Aid donations reduce adjusted net income. If you are close to £100,000, check your adjusted net income rather than your headline salary before assuming you are ineligible. See gov.uk/tax-free-childcare for HMRC's guidance on calculating adjusted net income.One parent cannot work — disability exception
If you are working and your partner is unable to work because they are disabled or because they are caring for a disabled person, you may still be eligible as a couple. The non-working partner must receive one of: Incapacity Benefit, Severe Disability Allowance, Carer's Allowance, or be in receipt of UC with a limited capability for work element.
Age limits for children
- Standard children: Eligible until 1 September after their 11th birthday
- Disabled children (receiving DLA, PIP, or Armed Forces Independence Payment, or certified blind): Eligible until age 17
What Childcare Costs Can Be Paid Through TFC?
You can only use Tax-Free Childcare to pay registered or approved providers. The provider must be registered with HMRC's TFC scheme — you can check this when logged into your childcare account.
Types of care that qualify
Types of cost that do not qualify
Tax-Free Childcare vs Childcare Vouchers (Edenred, Sodexo, Computershare)
The Childcare Voucher scheme (operated by employers through providers including Edenred, Sodexo, Computershare, and others) closed to new applicants in October 2018. If you joined before that date and have remained with the same employer, you can continue using vouchers — your employer deducts the voucher amount from your pre-tax salary, saving income tax and National Insurance on that portion.
| Feature | Tax-Free Childcare (TFC) | Childcare Vouchers |
|---|---|---|
| Open to new applicants? | Yes | No — closed Oct 2018 |
| Government top-up mechanism | 20% added by HMRC to account | Tax/NI saving via salary sacrifice |
| Max annual saving (basic rate) | £2,000/child/yr (gov contribution) | ~£933/parent/yr (tax + NI saving) |
| Max annual saving (higher rate) | £2,000/child/yr (gov contribution) | ~£624/parent/yr (higher rate less beneficial) |
| Disabled child limit | £4,000/child/yr | Same as standard |
| Available to self-employed? | Yes | No |
| Both parents must work? | Yes (with exceptions) | No — single parent with vouchers qualifies |
| Compatible with Universal Credit? | No | Yes |
| Can combine with free hours? | Yes | Yes |
| Income cap | £100,000 per parent | None |
⚠️ Cannot switch back to vouchers once you leave
If you are still receiving childcare vouchers and are considering switching to TFC, compare carefully first — you cannot return to the voucher scheme once you leave. Higher-rate taxpayers with childcare costs below £9,140 per year per parent may still be better off with vouchers. Use HMRC's childcare calculator on GOV.UK to compare both options for your specific circumstances before deciding. You must notify your employer within 90 days of applying for TFC to stop your vouchers.Tax-Free Childcare and Universal Credit — You Cannot Claim Both
This is one of the most important rules to understand before applying. Tax-Free Childcare cannot be claimed at the same time as Universal Credit or Working Tax Credit. If you currently receive UC or WTC, you must decide which route is more beneficial before applying for TFC.
When UC is usually better
Universal Credit's childcare element covers up to 85% of childcare costs, subject to a monthly cap (£1,071.09 for one child or £1,836.16 for two or more children in 2026/27). This is far more generous than TFC's 20% top-up for most lower and middle-income families. If you are already receiving UC and your income is in the range where you receive significant UC support, switching to TFC would typically leave you worse off.
When TFC is usually better
TFC becomes more beneficial once your income is high enough that your UC award is zero or near-zero — typically above approximately £40,000–50,000 household income — and your childcare costs are significant. The TFC maximum of £2,000 per child per year is most valuable when you have multiple children and high childcare spend.
How to Open a Tax-Free Childcare Account & Manage It
-
1
Check eligibility via the Government Gateway
Go to gov.uk/apply-for-tax-free-childcare. You will need your National Insurance number. If self-employed, also have your UTR ready. The application takes approximately 20 minutes. -
2
Only one parent opens the account — the other can pay in
Decide whose name the account will be in. Both parents can make payments into it, as can grandparents and other family members. If you cannot agree, you can both apply and HMRC will decide. Only one account is permitted per child. -
3
Pay in by bank transfer or standing order
Pay using bank transfer or standing order — not direct debit. The government top-up is applied on the same day as your payment. Money typically appears in your account within one working day. Pay in up to £8,000 per quarter per non-disabled child to maximise the £2,000 annual top-up. -
4
Pay your childcare provider directly from the account
Search for your provider within the account — they must be registered with TFC. Pay them directly through the platform. Keep records of payments in case of any query. -
5
Reconfirm eligibility every 3 months
HMRC sends a reminder before each quarterly deadline. Log in and confirm your circumstances have not changed. This takes under 2 minutes. If you miss it, your account is suspended — you can still use the existing balance, but no new top-up is applied until you reconfirm.
Frequently Asked Questions
How much is the Tax-Free Childcare top-up in 2026?
For every £8 you pay in, the government adds £2 — a 20% top-up. The maximum government contribution is £2,000 per child per year (£500 per quarter) for non-disabled children, and £4,000 per year (£1,000 per quarter) for disabled children. To hit the maximum, you need to spend at least £8,000 per year (£2,000 per quarter) on qualifying childcare per child.
Can I get Tax-Free Childcare if I am self-employed?
Yes. Self-employed parents are fully eligible. If you started trading less than 12 months ago, the minimum earnings requirement (£2,643/quarter) does not apply. If your income fluctuates, you can use your expected average earnings over the current tax year rather than the next 3 months. You will need your UTR when applying.
Can I use Tax-Free Childcare with free childcare hours?
Yes — they are separate, complementary schemes that can be used together. Your free childcare hours cover funded sessions at your provider; TFC covers additional hours, meals, and any extra costs. Using both maximises total support. You cannot use TFC at the same time as Universal Credit or Working Tax Credit, however.
What are childcare vouchers — and can I still get them?
Childcare vouchers (provided through employers via Edenred, Sodexo, Computershare, and other providers) closed to new applicants in October 2018. If you joined before the closure and remain with the same employer, you can continue. The vouchers work via salary sacrifice — you save income tax and NI on the voucher amount. You cannot start claiming vouchers for the first time today. For all new applicants, Tax-Free Childcare is the available scheme.
What happens if I do not reconfirm every 3 months?
Your TFC account is suspended and the government top-up stops being added. You can still use any balance already in the account, but no new government contribution is applied. Reconfirm as soon as you receive the HMRC reminder — it takes under 2 minutes online. HMRC sends reminders in advance of the deadline, so you should not miss it unless you ignore the notification.
Can I withdraw money from my Tax-Free Childcare account?
You can withdraw money from your account, but you only receive back what you paid in — the government top-up is returned to HMRC. It is better to only pay in amounts you will use for childcare in the near term. If you fall out of eligibility (for example, because your income exceeds £100,000), you can still use any remaining balance in the account to pay for childcare after the eligibility period ends.