Tax-Free Childcare

In April 2017 HMRC launched the Tax Free Childcare (TFC) scheme initially for children up to the age of 4, with a roll out to all children under the age of 12 by the end of the year.

TFC provides parents with a tax refund of up to 20% of their childcare costs. From October 2018 new working parents wishing to join the childcare voucher scheme will only be able to join the government TFC scheme, which provides annual savings of up to £2,000 per child if your childcare costs are £10,000+ per child per year. For disabled children the level of support is £4,000 on a maximum childcare cost of £20,000.

How does it work?

Parents will be able to open a new childcare account. For every £8 a parent pays into their childcare account, the government will pay in an extra £2. You can then use this money to pay your childcare provider.

Parents will only be able to pay their childcare provider from their childcare account if their childcare provider is signed up to Tax-Free Childcare.

Who Can Join?

You're usually eligible if all of the following apply:

Your child:

is under 12, or 17 if they're registered as having a disability
usually lives with you

You (and your partner, if you have one):

are 16 or over
live or work in the UK
are employed or self-employed
are over 21 and earn on average at least £120 a week, unless in your first year of self-employment. Different rates apply if you're under 21 or an apprentice
earn less than £100,000 a year each
don't get other support with your childcare, including from a childcare voucher or salary sacrifice scheme

You may also be eligible if you have a partner and one of you gets any of the following benefits:

Carers Allowance
Employment and Support Allowance
Incapacity Benefit
Severe Disablement Benefit

For more information on Tax-Free Childcare and the differences between childcare vouchers, please download this booklet - PDF 1.9 MB or visit Childcare Choices. Alternatively, contact your HR Advisor or the Salaries department.

You can also see which scheme would be right for you at Money Saving Expert - Tax-Free Childcare or view this infographic - JPG 543.3 KB