Tax Free Childcare! 

Tax Fee Childcare

Tax free childcare, As childcare voucher scheme offered by employers are not available to new applicants after October 2018, replaces with new system. It requires serious understanding regarding which one is better of two i.e. employer supported childcare vouchers and Tax-Free childcare vouchers. Only applicants who joined employer supported schemes or directly contracted childcare on or before 4 October 2018 may keep getting vouchers.

What’s New?

As a parent you can get £500 every 3 months (£2000 per year) for each child if you get Tax-Free Childcare. Tax-Free Childcare can be used to pay for approved childcare which includes the following:

  • registered childminder, playscheme, nursery or club
  • homecare agency worker
  • registered school
  • childminder with an Ofsted-registered child minding agency

Benefits of new childcare system !

  • For every 80p paid in either by you or someone else, the government will top up an extra 20p.
  • The scheme goes for children under the age of 12 (or under 17 if disabled).
  • Available to self-employed parents as well.
  • Any eligible working family can use it.
  • Parents and others also can pay money into their childcare account.
  • If no longer required, may withdraw the accumulated money.


Difference between Tax-Free Childcare and Childcare vouchers

Tax-Free Childcare Childcare vouchers
Administered by government, employer interference is not entertained.

• Available to self-employed as well.

• If a couple, both parents must work.


• Maximum income of £1,00,000.

• The maximum age for child -12years (17 years if disabled)

• Administered by the employer only and not all employer offers the scheme.

• Can’t avail if self-employed.

• Both parents need not be working.


• No maximum income limit.

• The maximum age for child- 15 years (16 years if disabled)



Furthermore, you may use the online calculator by the government of the UK to work out how much you can save on childcare costs.


Eligibility for Tax-Free Childcare

  • Both partners are in work or single-parent households.
  • You or your partner is on sick leave, annual leave, parental, maternity, paternity or adoption leave. However, if one is on parental leave then he/she cannot apply for the child he/she on leave for.
  • Getting (both you and your partner) at least the National Minimum Wage or Living wage for 16 hours a week on average, however not more than £1,00,000.
  • In case you are not working, you may still be eligible if your partner is working and you get incapacity benefit, Severe Disablement Allowance, Career’s Allowance or Employment and Support Allowance.
  • If you are self-employed and not expecting to earn enough profit in the next 3 months, you can use an average of how much is expected to earn over the current tax year.
  • If you are from outside the EEA and not accessible to public funds in the UK, then your partner may apply instead if they are from:
  • the UK or EEA
  • outside the EEA and their UK residence card says they can access public funds

You must communicate to your employer within 90 days of applying for Tax-Free Childcare to stop your childcare vouchers or directly contracted childcare.