Family finances are being stretched at the moment, be it rising heating and fuel bills, food prices on the up, mortgage hikes and the health and social care levy starting to bite.  On top of that, for working parents, there may be childcare costs to fork out for as well.

Every penny counts.

That’s why HMRC were shocked to find that more than 78% of eligible families have not taken advantage of the Tax-Free Childcare Scheme (TFCS). That equates to £2.8 billion per year of tax-free childcare support not being claimed.

That is over 1 million families missing out on saving childcare costs of up to £2,000 per child per year (£4,000 if the child is disabled)!! Money which could perhaps be better used elsewhere.

HMRC were so shocked by this they commissioned a survey. 50% of those eligible families surveyed were not aware of the TFCS. Out of the remaining 50% a significant number did not think they were eligible or did not understand how the scheme works.

How does it work?

  • You open a Tax-Free Childcare account for each child.
  • For every £8 you put into the account, HMRC will add £2 (up to a maximum top up of £2,000/£4,000).
  • It does not have to be you who pays into the account, it could be your wider family or even friends.
  • You need to go back into the account every 3 months to confirm that you are still eligible.
  • If you already claim the 30 hours a week free childcare support (12.5 hours in Northern Ireland), you can still use the TFCS for additional support above the 30-hour threshold.

What are the eligibility criteria?

  • Your child must be 11 or under and usually live with you. If your child is disabled then the age limit is 17. Adopted children are eligible.
  • You must use an approved childcare provider who is set up to take payments through the TFCS.
  • A childcare provider might be a nursery, childminder, nanny, after school club or play scheme.
  • You must not be in receipt of working/child/universal tax credits, nor childcare vouchers.
  • You and your partner (if you have one), need to earn, on average, at least the national minimum wage/national living wage for at least 16 hours a week, unless you are in receipt of either disability living allowance, personal independence payment, armed forces independence payment or child disability payment (Scotland only).
  • Your total income, or that of your partner, must not exceed £100,000 in the tax year.
  • A ‘partner’ includes someone who you are living with as if you are married or in a civil partnership.
  • You can claim it if you are employed or self-employed.
  • You or your partner must have a National Insurance number and at least one of the following:

a) British or Irish citizenship.

b) Settled or pre-settled status, or you have applied and are awaiting a decision.

c) You have permission to access public funds – your residence card will tell you if you cannot do this.


If you are in receipt of childcare vouchers, dependent upon the age of your child, the number of children you have and the level of your income, it may be worth switching across to the TFCS.

Please do not hesitate to contact us if you need any help in this respect.

About the Author

✨Shaking up the accounting profession ✨Business coach ✨Book Author ✨ Multi business-owning mom & wife. I love to make business fun & have a passion for teaching my clients how to build a life they love while making an income they deserve!

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