HMRC has issued an update on Tax-Free Childcare top-up payments, revealing that a record number of families are saving up to £4,000 a year through the scheme. The government funded almost £600 million in top-up payments in 2025-26, with 868,095 families benefiting.
Record Participation and Savings
Latest figures show a record 868,095 families are using Tax-Free Childcare, saving thousands on childcare costs last year. HMRC encourages families to sign up ahead of the summer holidays to maximise savings.
Tax-Free Childcare is a government-funded top-up scheme for approved childcare for children aged 11 or under, or up to 16 if disabled. Working parents can save up to £2,000 annually per child, or £4,000 if the child is disabled.
How the Scheme Works
For every £8 deposited by parents, the government adds £2. Parents can receive up to £500 (or £1,000 if disabled) every three months. Funds can be used for before/after-school clubs, childminders, holiday clubs, or specialist equipment for disabled children.
Eligibility Criteria
Families may qualify if they have children aged 11 or under (eligibility ends September 1 after 11th birthday; disabled children up to 16). Parents must earn at least National Minimum Wage or Living Wage for 16 hours a week on average, each earning no more than £100,000 annually, and not receiving Universal Credit or childcare vouchers.
HMRC’s Chief Customer Officer Myrtle Lloyd said: “I’m so pleased these figures show more families than ever are using Tax-Free Childcare to save on their bills. £2,000 is not a small amount and it can make a real difference – especially with the childcare void of the summer holidays approaching. If you haven’t signed up yet, don’t miss out, go to GOV.UK to do it today.”
Families are urged to check eligibility and apply on GOV.UK.
