Tax-free childcare and employer childcare: what can you claim?
Check the funded hours first, then compare help with the bill left over. Do not give up old employer vouchers until you know what switching will cost.
A childcare bill can swallow the pay from a shift before you have bought the bus ticket. Your employer does not have to help, but you may qualify for state support even on agency hours or as a self-employed worker. Start with the funded childcare available where you live. Then work out who will help pay the bill left over, without giving up an old benefit you cannot get back.
- £2+£8
- state adds £2 per £8 paid
- £2,000
- standard annual top-up limit per child
- 85%
- Universal Credit childcare help rate
- 30 hrs
- funded hours in England weekly
What you can claim at a glance
State support is not an employer perk. You apply for Tax-Free Childcare or Universal Credit yourself. Funded early education and childcare depend on where you live and your child’s age. Employer vouchers and workplace nurseries have separate tax rules, and there is no general legal right to an employer-funded place.
| Scheme | What it pays | Who can qualify | What to check |
|---|---|---|---|
| Tax-Free Childcare | £2 per £8 deposited; up to £500 per child every 3 months | Eligible working parents across the UK; disabled-child limits are double | Earnings and immigration rules; approved provider signed up to the scheme |
| Funded hours in England | 30 hours a week for 38 weeks a year | Eligible working parents, from the term after their child turns 9 months to school age | Apply before the term deadline; other funded offers exist |
| Universal Credit childcare | Up to 85% of eligible costs; monthly caps of £1,071.09 for one child or £1,836.16 for two or more | Eligible UC claimants in paid work or starting a job | No minimum working hours; normally reimbursements, with help available for upfront costs |
| Employer vouchers or directly contracted childcare | A tax and National Insurance exemption on a limited amount | Existing members who meet the rules for the scheme closed in October 2018 | Cannot start receiving these benefits alongside Tax-Free Childcare |
| Qualifying workplace nursery | The childcare benefit can be tax and National Insurance free, without a weekly cap | Employees offered a place through a qualifying employer scheme | HMRC’s conditions and the minimum wage limit on salary sacrifice |
A new warehouse or care agency job advertising “childcare vouchers” cannot put you into the old tax-exempt scheme. Ask what the offer actually is. An ordinary cash childcare allowance is taxable, unlike a qualifying nursery place.
Tax-Free Childcare: the main scheme for working parents
Tax-Free Childcare adds £2 for every £8 you deposit into an online childcare account. That is 25% of your deposit, or 20% of the bill. Pay your provider from the account.
The top-up limit is £500 per child every three months, or £2,000 a year. For an eligible disabled child, both limits double. Eligibility ends in the September after the child turns 11, or 16 if disabled. Disability eligibility requires specified benefits or certification of blindness or severe sight impairment.
Under the usual earnings test, you and any partner must each expect to earn the equivalent of 16 hours a week at your age-related minimum wage, averaged over the next three months. You need not work exactly 16 hours. From 6 April 2026, the age-21-plus rate is £12.71, giving a threshold of £203.36 a week or £2,643.68 over three months. Earnings from multiple jobs count together.
Neither person’s expected adjusted net income can exceed £100,000 for the tax year. Exactly £100,000 is within the limit. Adjusted net income is not simply your salary, and can include other taxable income. Certain pension contributions and Gift Aid donations reduce it.
Exceptions include a working parent’s partner receiving specified disability or caring benefits. Your child must usually live with you, and immigration conditions apply. Check the full eligibility rules if your visa restricts access to public funds.
The provider must be registered or approved and accept Tax-Free Childcare. Nurseries, childminders, approved nannies, breakfast clubs and holiday clubs can qualify. Using a nanny agency does not establish eligibility. Informal, unregistered care by friends or relatives does not qualify. Meals and nappies can count as part of eligible care.
Reconfirm eligibility every three months, even if nothing changes. You cannot receive Tax-Free Childcare while you or your partner claim UC, even without its childcare element. You can combine it with funded hours.
Example: a support worker’s £800 nursery bill
Amara, an eligible support worker in Leeds, pays £800 a month after funded hours. She deposits £640 and HMRC adds £160. That is £480 per three-month period and £1,920 a year. A £2,500 bill within one entitlement period would use the full £500 top-up, with Amara paying £2,000.
Funded hours come first, then top up the rest
England’s working-parent offer expanded to 30 funded hours a week from September 2025. It covers 38 weeks a year, from the term after an eligible child turns 9 months until school age. The usual earnings floor and income ceiling match Tax-Free Childcare, though some exceptions differ. All three and four-year-olds can get 15 universal hours regardless of parental work or income. Some two-year-olds get 15 hours because they or their family receive extra support.
The 30 hours include the universal 15. Some providers spread the annual hours over more weeks, giving fewer funded hours each week. Tax-Free Childcare or UC childcare can help with eligible extra care, including holiday weeks and wraparound care.
What changes across the UK
- Scotland funds 1,140 hours a year for three to five-year-olds and eligible two-year-olds, about 22 hours a week over 52 weeks. It has no equivalent working-parent offer from 9 months.
- Wales offers eligible families up to 30 hours a week of combined education and childcare for three and four-year-olds, for up to 48 weeks.
- Northern Ireland’s Childcare Subsidy Scheme offers a separate 15% subsidy for eligible working parents using Tax-Free Childcare, for children up to 11. This is distinct from the UK-wide £2-for-£8 top-up. Continuation is confirmed for 2026/27, not indefinitely. Ask your provider how it applies the subsidy.
On Universal Credit: claim 85% instead
Universal Credit childcare support can cover up to 85% of reasonable registered childcare costs that enable you to work. From 6 April 2026, the maximum reimbursement per monthly assessment period is £1,071.09 for one child or £1,836.16 for two or more. These are limits on the help, not on the bill.
You must be in paid work or starting a job in the next month. There is no minimum-hours test. Both partners normally need to work, with exceptions where one cannot look after the children, including specified disability or caring circumstances. Support runs until 31 August after a child’s 16th birthday.
Example: a cleaner’s £600 childminder bill
An eligible £600 monthly bill gives a UC childcare element of £510. Tax-Free Childcare would contribute £120. The cleaner cannot claim both. The £510 enters her UC calculation; earnings and other circumstances affect the final award.
Report costs in the assessment period when you paid, or the following period. Later reporting can lose you the reimbursement. UC pays only after the childcare happens, so advance payment does not trigger immediate lump-sum reimbursement. The DWP guidance covers Great Britain and links to Northern Ireland’s rules.
Childcare vouchers: the closed scheme some staff still hold
Vouchers and directly contracted childcare closed to new applicants in October 2018. Continuing members must have joined and had wages adjusted on or before 4 October 2018, stayed with the same employer while it runs the scheme, and not taken an unpaid career break longer than a year. Check continuity after a business takeover.
You save tax and employee National Insurance, rather than receive a state payment. Members who joined before 6 April 2011 can retain a £55 weekly limit regardless of tax band. For later joiners, the employer’s basic earnings assessment sets the limit. Standard weekly and monthly amounts are £55 and £243 at basic rate, £28 and £124 at higher rate, and £25 and £110 at additional rate. See HMRC’s exemption rules.
Example: what £243 of vouchers saves
A nursery nurse sacrifices £243 a month, or £2,916 a year. Assuming the whole amount would attract 20% tax and 8% employee NI, she saves £583.20 plus £233.28, a total of £816.48. Tax-Free Childcare beats that when her eligible annual bill exceeds £4,082.40, subject to eligibility and quarterly caps.
Two voucher-holding parents could save £1,632.96 on those assumptions. Voucher limits are per parent; Tax-Free Childcare limits are per child. Compare tax rates, bills after funded hours and children’s ages. Vouchers can cover older children than Tax-Free Childcare.
Workplace nurseries: check what is really tax free
A qualifying workplace nursery benefit is tax and National Insurance free without a weekly cap. With salary sacrifice, you give up salary for the place. “Tax free” does not mean employer-paid.
The scheme must meet HMRC’s conditions, including registration and availability to employees. Commercial partnerships are allowed, but the employer must be genuinely responsible, wholly or partly, for financing and managing the care. Paying fees plus a token contribution is not enough without a real management role.
Salary sacrifice must leave pay for minimum wage purposes at or above the applicable rate. That can exclude a cleaner or kitchen porter paid near the minimum. The all-employee availability condition allows an exception where participation would breach minimum wage rules.
Which leaves you better off
Compare savings on the costs left after funded hours. Count both parents’ vouchers and check the whole UC award.
Example: two children do not guarantee a £4,000 top-up
A teaching assistant’s £9,000 eligible annual bill across two children, after funded hours, earns £1,800 through Tax-Free Childcare, subject to eligibility and quarterly caps. Her vouchers might save £816.48, or £1,632.96 if her partner also holds vouchers on the same assumptions. The full £4,000 top-up for two non-disabled children requires £20,000 of eligible bills, within each child’s quarterly limits.
If your hours change, or you are agency or self-employed
A zero-hours contract does not bar you from state childcare help or automatically mean you are not an employee. Check who employs you and what employer benefits it offers. Agency earnings count for Tax-Free Childcare.
A carer aged 21 or over working two seven-hour shifts at £12.71 earns £177.94 a week, below the usual £203.36 earnings equivalent. But one bad week does not settle an average-earnings test. If you work throughout the year but are paid irregularly, a tax-year average may apply. After a rota cut, ask the Childcare Service and provider what funding changes and when.
Self-employed parents can qualify below the usual floor in their business’s first 12 months. Others may use expected tax-year average earnings if the next three months are too low. UC can recognise reasonable childcare costs for variable rotas, including when shifts fall short of expectations.
Maternity, paternity, adoption, shared parental and sick leave can preserve Tax-Free Childcare eligibility. Check application timing for the child the leave relates to, rather than assuming every return-to-work date qualifies.
The rules here are in force on 1 October 2026. April’s leave and sick-pay reforms did not change childcare funding. Leave and childcare eligibility are separate questions.
How to claim without losing weeks
- Get an itemised bill. Separate funded hours, paid care and extras, including holiday clubs. Confirm provider approval and which payment schemes it accepts.
- Compare before giving anything up. Use the government childcare calculator. Get a benefits check if relevant. Count both parents’ vouchers. Do not leave UC or an old employer scheme just to open a childcare account.
- Meet England’s application deadline. Apply by 31 December for January, 31 March for April, or 31 August for September. Child age and work or return-to-work dates also affect eligibility. Apply early enough for checks. Give the provider your code, National Insurance number and child’s date of birth.
- Pay through the account and set a reminder. Reconfirm every three months for Tax-Free Childcare and England’s working-parent hours. Save the confirmation.
- Report UC costs promptly. Keep invoices and payment evidence. Report in the assessment period you paid or the next one. Ask about upfront help before a new job’s first childcare bill.
If your employer or a scheme gets in the way
Contact the Childcare Service for account problems, your council’s early years team for English funded-hours or compulsory-extras disputes, and a benefits adviser about challenging a UC decision. Keep decisions, dates received, invoices and payment records.
At work, save your contract, payslips, sacrifice agreement, rota messages and requests. An employer still has to honour contractual benefits and must not discriminate or make unlawful deductions, even though it need not create a nursery scheme.
In Great Britain, employees can request flexible working around childcare. Refusal is not automatically unlawful. The employer must consult before rejecting a statutory request and needs a permitted business reason. See Acas’s guidance and our flexible-working guide. Seek advice separately about suspected discrimination or punishment for protected leave.
Ask your union rep to check the agreement or challenge a rota change. USDAW covers retail; UNISON has care and NHS members; Unite or GMB may organise hospitality, food or logistics workplaces. IWGB organises groups including outsourced workers and riders. Legal support depends on membership rules, so joining after a dispute does not guarantee representation.
For employment advice, contact Acas, Citizens Advice or a law centre in Great Britain. Ask about claim deadlines now, not after an internal dispute ends. Report suspected minimum wage underpayment through the official pay-and-work-rights complaints route for HMRC enforcement. In Northern Ireland, use the Labour Relations Agency and check our guide to the different rules.
Questions people ask
Can you use Tax-Free Childcare and funded hours together?
Yes, if eligible. Tax-Free Childcare helps with qualifying costs outside the funded hours. UC childcare can also work alongside funded hours, but not alongside Tax-Free Childcare.
A new job offers childcare vouchers. Can you join?
Not the old tax-exempt scheme. Ask whether the advert means a taxable allowance or a different nursery benefit.
Does UC always repay 85% of the bill?
No. Eligible costs and monthly caps limit the childcare element, and earnings affect the final UC award. You normally pay first, though non-repayable upfront help may be available.
Can nursery salary sacrifice take you below minimum wage?
No. It must leave pay for minimum wage purposes at or above the applicable rate, £12.71 an hour for workers aged 21 or over from 6 April 2026.
Does income over £100,000 remove all childcare help?
No. It removes eligibility for Tax-Free Childcare and England’s working-parent hours if either adult’s expected adjusted net income exceeds the cap. England’s universal 15 hours for three and four-year-olds remain. Exactly £100,000 does not exceed the cap.
Can you spend saved vouchers after switching?
Yes, including alongside Tax-Free Childcare payments. You cannot keep receiving new vouchers. Tell your employer within 90 days of getting Tax-Free Childcare; once told, you cannot rejoin.
Sources
- Tax-Free Childcare, GOV.UK
- Tax-Free Childcare eligibility, GOV.UK
- Tax-Free Childcare Technical Manual: adjusted net income, HMRC
- Childcare vouchers and other employer schemes, GOV.UK
- Employer-supported childcare, 480 Appendix 11, HMRC
- Expenses and benefits: childcare, what is exempt, GOV.UK
- Commercially marketed workplace nursery schemes, HMRC
- Universal Credit childcare costs, including reporting deadlines and upfront help, DWP, updated 6 April 2026
- Free Childcare for Working Parents: eligibility, extras and application deadlines, GOV.UK
- Funded early learning and childcare, mygov.scot
- Childcare for three and four-year-olds, Welsh Government
- Continuation of the Northern Ireland Childcare Subsidy Scheme, Department of Education NI
- National Minimum Wage rates, GOV.UK
- Childcare Survey 2026, Coram Family and Childcare
- Universal Credit childcare costs support research, DWP
- Childcare calculator, GOV.UK
- Making a decision on a statutory flexible-working request, Acas
- April 2026 sick pay and parental leave changes, GOV.UK