HMRC officials are urging families in the UK to check their eligibility for a scheme that could reduce annual bills by up to £2,000, or even more in some cases. Government tax officers report that more families than ever are taking advantage of Tax-Free Childcare to lower their childcare costs, following the government's allocation of nearly £600 million in top-up payments during 2025-26.
Record Number of Families Benefiting
The latest figures reveal a record 868,095 families are now benefiting from the scheme, saving thousands on childcare last year. HM Revenue and Customs (HMRC) is encouraging families to register ahead of the summer holidays.
Tax-Free Childcare is a government-funded top-up scheme designed to cover approved childcare costs for children aged 11 or under, or up to 16 years old if the child has a disability. Working parents can save up to £2,000 annually per child, or £4,000 if their child is disabled.
HMRC Chief Customer Officer Speaks Out
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."
How the Scheme Works
Once a Tax-Free Childcare account is opened, for every £8 deposited by parents, the government adds a further £2. Parents can receive up to £500 every three months — or £1,000 if their child is disabled — to assist with childcare expenses.
The funds can be used for any approved childcare costs, including before or after-school clubs, a childminder, or holiday activity clubs. They can also cover specialist equipment a childcare provider may require for a disabled child.
Eligibility Criteria
Families could be eligible for Tax-Free Childcare if:
- Each parent earns no more than £100,000 per annum
- The parent and their partner (if they have one) earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average
- They do not receive Universal Credit or childcare vouchers
- They have a child or children aged 11 or under. Eligibility stops on 1 September after their 11th birthday. If the child has a disability, they receive up to £4,000 a year until 1 September after their 16th birthday
Families can check their eligibility and apply on GOV.UK. Tax-Free Childcare can be used alongside the free childcare hours offer, provided eligibility requirements are met.
