Tax-Free Childcare Calculator

Tax Free childcare Calculator

Savings

Upto 20%

Working Hours

Parents must work minimum 16 hours

Income

Less than £100,000
(Both Parents)

Out of Work

Eligible if starting work within 31 days of application

Age

Children under 12 or 17 (disable child only)

For Citizens Of

England
Scotland
Wales
Northern Ireland

Childminder

Must be registered with Government authorities like Ofsted

Contributions

Recieve upto £500 every 3 months (upto £2000 per year)

Tax Free Childcare Calculator

Tax-free Childcare provides the parents of United Kingdom a facility to lower the childcare costs upto 20%, for every £8 contributed by parents, £2 is added into the account by the British government. These funds can be used to fund childcare costs to registered childcare minders and registered nurseries. Tax free childcare calculator saves you the hassle to calculate your costs manually!

Eligibility

  • Parents must be working minimum of 16 hours per week as per the national minimum income
  • Parents income must be less than £100,000 annually
  • Child must be less than 12 years or 17 in case of disability
  • Parents must be UK`s residents or allowed to access public funds

Childcare Support Can Be Used For

Approved

  • Childminders
  • Play scheme
  • Nursery or club
  • School registered to provide childcare support
Tax Free childcare calculator infographic

Income

The minimum requirement is 16 hours per week as per the national minimum wage limit; however the maximum earnings in a year must be less than £100,000

Income of both parents (if applicable) should be less than £100,000 annually

Out Of Work Parents

You may still qualify if your partner is working and you receive one of following:

  • Incapacity Benefit
  • Severe Disablement Allowance
  • Contribution-based Employment and Support Allowance

Child's Age and Needs

The scheme covers children up to the age of 12, extending to 17 for children with a disability.

Children remains eligible to receive childcare till September next year after their 11th or 16th birthday if they have a disability.

Immigration Status

Parents must have a National Insurance Number to be able to apply and at least one of the following depending upon their circumstances:

  • Irish or British citizenship
  • Permission to access public funds - UK`s residence cards mentions if you have permission or not
  • Settled or pre-settled status, or if application is awaited approval.

If you have a partner, he or she must have a National Insurance Number as well.

If you’re living in an EU country, Switzerland, Norway, Iceland or Liechtenstein, you (or your partner if you have one) may still be eligible if:

  • Your work is in the UK
  • The work started before 1 January 2021
  • You have worked in the UK at least once every 12 months since you started working here.

Separated Parents

Separation adds complexity, but support is still available. Generally, the parent with primary caregiving responsibilities applies for the scheme. If you share custody equally, you'll need to agree on who makes the claim.

If you did not find what you are looking for in terms of eligibility requirements, you may want to check out this detailed guide on eligibility requirements of Tax-free Childcare for more queries.

Pros and Cons of the Tax-Free Childcare Scheme

Benefits of Tax free childcare

Tax-Free Childcare offers substantial benefits for families but also comes with a few limitations. Here’s an overview of the scheme’s main advantages and disadvantages.

Pros

  • Flexibility in Usage
  • Online Account for Easy Management
  • Self-employed Eligibility
  • Support for Children with Disabilities
  • Government Contribution
  • Compatible with 30 Hours Free Childcare support and 15 Hours Tax free childcare support
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Cons

While this scheme seems promising there are some notable drawbacks to consider

  • It Isn’t Truly “Tax-Free” Childcare! The term “Tax-Free Childcare” may be misleading, as it isn’t a fully tax-free option but rather a government top-up. The funds added to a parent’s account come from government contributions rather than a complete exemption from tax.
  • It Isn’t Compatible with some other Schemes: Although compatible with 30 hours and 15 hours tax-free childcare, it is not compatible with Childcare Vouchers, tax credits, or Universal Credit.
  • You Are Limited to a Certain Amount Each Quarter: Parents are limited to depositing £2,000 per child every quarter, which can restrict families with higher childcare costs from maximizing savings. The quarterly limit means that once the maximum is reached, no additional government top-up will be available until the next quarter.

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How Do I Check if My Provider Is Registered?

To qualify for support, parents must ensure their childcare provider is registered with the relevant authority, such as Ofsted in England, the Care Inspectorate in Scotland, or CSSIW in Wales.

How Do I Find a Registered Provider?

You can find registered childcare providers by searching online government databases or contacting local childcare resources. Websites like Ofsted or Childcare.co.uk allow you to filter providers by location, type of care, and registration status. Local councils also offer lists of approved childcare options, and some websites feature reviews to help you make an informed choice.

If Your Childcare Provider is in an EEA Country

For families living in or seeking childcare in a European Economic Area (EEA) country, providers must meet that country’s specific registration or approval criteria to qualify for UK support schemes. The UK government recognizes some overseas providers if they meet equivalent standards, so parents should verify that EEA providers are registered under local regulations.

FAQs

Typically, both parents need to be working to qualify. Each parent must earn at least the National Minimum Wage or Living Wage for 16 hours a week. However, there are exceptions. If one parent is unable to work due to disability, illness, or caring responsibilities, you may still be eligible. It's worth checking the specific criteria to see if you qualify under these exceptions.

Absolutely! You can apply up to 31 days before you start a new job. This allows you to set up childcare arrangements in advance, ensuring everything is in place when you begin working. Just provide details of your new employment when you apply.

No need to wait! You can apply up to 31 days before you begin or return to work. This flexibility allows you to organize childcare ahead of time, giving you one less thing to worry about as you transition back to work

Yes, you can still access Tax-Free Childcare while you're on parental or adoption leave, but there are some conditions. You can continue to claim for any existing children not covered by your leave. However, you generally cannot claim Tax-Free Childcare for the new child until you return to work. It's designed this way because the scheme requires you to be in paid work to be eligible.

Yes, you are still eligible. Tax-Free Childcare is not considered a "public fund" under immigration rules. As long as you're working in the UK and meet the other eligibility criteria, you can apply even if your visa states "no recourse to public funds."

Yes, if you undertake Keeping in Touch (KIT) days during your maternity leave, you can count these towards your working hours for Tax-Free Childcare eligibility. This can help you meet the minimum income requirement during your leave period.

Yes, you are eligible for additional support. For a disabled child under 17, the government increases the annual limit from £2,000 to £4,000 per child. Your child must receive Disability Living Allowance, Personal Independence Payment, or be certified as blind or severely sight impaired.

Absolutely! You can use Tax-Free Childcare alongside the 15 or 30 hours of free childcare provided for three and four-year-olds. This can help cover additional costs, such as extra hours, meals, or activities not included in the free entitlement.

If you're already benefiting from the Childcare Voucher scheme, you need to compare it with Tax-Free Childcare to see which offers you greater savings. Remember, you cannot use both schemes simultaneously. Use the government's Childcare Calculator to assess which option is more advantageous for your situation.

Applying for Tax-Free Childcare will end your entitlement to Tax Credits or the childcare element of Universal Credit, which might offer you more financial support. It's crucial to compare the benefits before making a decision. The government's Childcare Calculator can help you determine which option is best for you.

Yes, Tax-Free Childcare covers approved childcare during school holidays. This includes holiday clubs, camps, and childminders. Using the scheme can help offset the increased childcare expenses that often come during these periods.

Definitely! Tax-Free Childcare can be used for after-school clubs and activities, provided the provider is registered and approved. This support makes it easier to manage work commitments knowing your child is in safe hands after school hours.