Working parents are being urged to check whether they could cut the cost of childcare after the latest HM Revenue and Customs (HMRC) figures showed families using the Tax-Free Childcare scheme received an average government top-up of £92 in March.
Record number of families using scheme
The latest official statistics show 601,000 families used Tax-Free Childcare for 744,000 children in March 2026 - the highest number of families using the scheme since it was introduced. During the month, the Government paid £55 million in top-up payments to help working parents with childcare costs.
HMRC is highlighting the support available as families prepare for the new school term following the summer holidays.
How Tax-Free Childcare works
Tax-Free Childcare can provide eligible working families with up to £2,000 a year per child, or £4,000 a year for a disabled child, to help pay for approved childcare including nurseries, childminders, holiday clubs, breakfast clubs and after-school clubs.
Parents receive a £2 government top-up for every £8 they pay into their Tax-Free Childcare account, with almost 75,000 childcare providers now signed up to accept payments through the scheme.
HMRC's latest figures also show increasing numbers of parents are using the scheme for older children, with the number of families claiming Tax-Free Childcare for children aged eight and over increasing by more than 20 per cent compared with the previous year.
What HMRC says
Myrtle Lloyd, HMRC's Chief Customer Officer, said: "Tax-Free Childcare can help with your summer childcare plans and, looking to the term ahead, with whatever type of care you require for your child.
"If you haven't signed up already, do it today so you don't miss out. Go to GOV.UK and search 'Tax-Free Childcare'."
Eligibility criteria
Families may be eligible if they have a child aged 11 or under, or 16 or under if the child has a disability. To qualify, each parent must normally earn at least the equivalent of 16 hours a week at the National Minimum or National Living Wage, but less than £100,000 a year.
However, Tax-Free Childcare cannot be claimed alongside Universal Credit childcare support or childcare vouchers, although it can be used alongside the Government's funded childcare hours where families are eligible.
Parents can open an account for each eligible child, pay money in when needed and withdraw any unused funds if their childcare arrangements change.
Tax-Free Childcare in a nutshell
For every £8 deposited in a Tax-Free Childcare account, the UK Government tops it by £2, which means parents can receive up to £500 (or £1,000 if their child is disabled) every three months towards paying for their childcare costs.
Once families have opened a Tax-Free Childcare account, they can deposit money and use it straight away or keep it in the account to use it whenever it’s needed. Any unused money in the account can be withdrawn at any time.
HMRC said it takes just 20 minutes to apply online for a Tax-Free Childcare account.
Eligibility for Tax-Free Childcare
Families could be eligible for Tax-Free Childcare if they:
- Have a child or children aged 11 or under. They stop being eligible on September 1 after their 11th birthday. If their child has a disability, they may get up to £4,000 a year until September 1 after their 16th birthday
- Earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average
- Each earn no more than £100,000 per annum
- Do not receive Universal Credit or childcare vouchers
A full list of the eligibility criteria is available on GOV.UK.
