With summer holidays on the way, you may be thinking of how to budget for holiday clubs or extra childcare.  Or maybe you’re looking ahead to the new school year in September and planning nursery or after-school clubs.

Did you know that with the government’s Tax-Free Childcare scheme, you can save up to £2,000 per child per year on your childcare fees?

In the 2024 to 2025 tax year, HMRC reported that almost 826,000 families shared over £630 million in government top-ups towards their childcare bills.   By signing up, parents can use the scheme to help to pay for approved childcare – such as nursery and after-school clubs, or breakfast and holiday clubs. 

How it works

If you are eligible, you can set up a Tax-Free Childcare account and deposit money to use straightaway or save to use at any time of the year. 

For every £8 you deposit, the government will top it up by £2, effectively topping up childcare savings by 25%.  This means you can receive up to £500 every three months towards your childcare costs (up to £1,000 every three months if your child is disabled).

This support is capped at a maximum of £10,000 in contributions per child each year, meaning you could receive up to £2,000 annually per child, or £4,000 for children with disabilities.

You could be eligible if:

•  You have a child or children 11 years old or under (16 years old or under for children with disabilities)
•  You and your partner earn at least the National Minimum Wage or Living Wage for 16 hours a week on average

•  You each earn no more than £100,000 per year
•  You do not receive Universal Credit or childcare vouchers.

For more information and to check your eligibility, go to GOV.UK. 

If you have any questions on this topic, or any other tax and accounting issues, please contact us.

Internet link: GOV.UK