Tax-Free Childcare for 2027/28 — the 25% top-up is unchanged. Eligibility thresholds may update when the 2027/28 NLW is confirmed.
Last reviewed: May 2026. The £2,000/year government top-up is confirmed unchanged for 2027/28. The minimum earnings threshold (linked to NLW) will update in spring 2027 when the April 2027 NLW is confirmed.
Tax-Free Childcare — 2027/28 Summary
| Government top-up rate | 25% (£2 for every £8 you pay in) |
| Maximum top-up per child (standard) | £2,000/year (£500/quarter) |
| Maximum top-up per disabled child | £4,000/year (£1,000/quarter) |
| Your contribution to get max top-up | £8,000/year per child |
| Total in account (max) | £10,000/year per child |
| Child age limit | Under 11 (under 17 if disabled) |
| Income cap (each parent) | £100,000 adjusted net income/year |
| Minimum earnings (approx.) | ~£1,909/quarter (16 hrs/week at NMW — updated when 2027/28 NLW confirmed) |
How Tax-Free Childcare Works
- Open a Tax-Free Childcare account at childcare.gov.uk
- Pay in from your bank — up to £2,000 per quarter per child
- Government tops up 25% — e.g. pay in £200, receive £250 in your account
- Pay your provider directly from the account
- Reconfirm eligibility every 3 months
Worked Example — Two Children
| You pay in (per child, per year) | £8,000 |
| Government top-up per child | £2,000 |
| Total in account per child | £10,000 |
| Two children total in account | £20,000 |
| Government contribution total | £4,000 |
Can I Use Tax-Free Childcare? — Decision Guide
| Your situation | Best childcare support |
|---|---|
| Working, not on UC/Tax Credits, income under £100k | Tax-Free Childcare |
| On Universal Credit | UC childcare (up to 85% of costs) |
| On Tax Credits | Tax Credits childcare element (up to 70%) |
| On childcare vouchers (pre-October 2018 employer scheme) | Vouchers — cannot switch to TFC |
| Self-employed, variable income | Tax-Free Childcare (use quarterly average) |
| High earner — one parent over £100k | Not eligible |
Tax-Free Childcare and Free Hours
| Child’s age | Free hours entitlement (from Sep 2024) | Tax-Free Childcare |
|---|---|---|
| 9 months – 3 years (working parents) | 15 hours/week (rising to 30 hours) | Yes — for paid hours/costs above free entitlement |
| 3–4 years (all children) | 15 hours/week | Yes |
| 3–4 years (working parents) | 30 hours/week | Yes — for extras above 30 hours |
| 5–10 years | None | Yes — after-school, holiday clubs, childminders |
Which Childcare Providers Are Eligible
Childcare providers must be registered with their relevant regulator to accept Tax-Free Childcare payments:
| Country | Regulator |
|---|---|
| England | Ofsted |
| Scotland | Care Inspectorate |
| Wales | Care Inspectorate Wales |
| Northern Ireland | Health and Social Care Trust |
Eligible providers include: nurseries, childminders, after-school clubs, holiday clubs, and nannies — provided they are Ofsted-registered (or equivalent). Not all childminders accept TFC — check with them before opening an account.
What Happens if Your Income Changes
Tax-Free Childcare is confirmed quarterly. If your income varies (particularly for self-employed people), you reconfirm eligibility every 3 months. If your income drops below the minimum earnings threshold in one quarter, you can still use the funds already in the account — but you cannot add more until your earnings recover above the threshold.
If you or your partner temporarily earn over £100,000 in a quarter (e.g. due to a bonus), you will not qualify for that quarter — DWP will notify you. You can reapply the following quarter if income returns below the cap.
Employer Childcare Vouchers vs Tax-Free Childcare
Some employers still offer childcare vouchers through salary sacrifice schemes (closed to new entrants from October 2018). If you are already in a voucher scheme:
| Childcare Vouchers | Tax-Free Childcare | |
|---|---|---|
| Annual saving (basic rate taxpayer) | Up to £933/year | Up to £2,000/year per child |
| Higher rate taxpayer saving | Up to £1,196/year | Up to £2,000/year per child |
| Eligibility | Open to existing members only | Both parents working |
| Children’s age | Up to 15 (16 if disabled) | Up to 11 (17 if disabled) |
For most families, Tax-Free Childcare is now more generous — but you cannot receive both. If you are still on childcare vouchers, calculate which is better for your situation before switching.