Tax-Free Childcare calculator
Tax-Free Childcare pays £2 for every £8 you put into a childcare account, a 20% subsidy on nursery, childminder and wraparound costs, capped at £2,000 per child per year (£4,000 for a disabled child). Despite the name, it has nothing to do with your tax code.
The government adds
£1,920.00 a year
Of £9,600 of childcare, you pay £7,680.00, the state pays £2 for every £8 you put in, up to £2,000 per child per year.
The £100,000 catch
Tax-Free Childcare stops the moment either parent's adjusted net income exceeds £100,000, and it ends all at once, with no taper. One pound over the line forfeits the entire £1,920.00 above, and the free-hours entitlement with it. A pension contribution that brings ANI back under £100,000 is often worth several times its cost for a parent near the threshold.
Who is eligible?
Both parents (or a single parent) must be working and each earning at least the equivalent of 16 hours a week at minimum wage, the child must be 11 or under (16 or under if disabled), and, the binding constraint for higher earners, neither parent's adjusted net income may exceed £100,000. That last test is a cliff edge, not a taper: one pound of ANI over the line ends the top-up and the free-hours entitlement for the whole household, and it is re-confirmed every three months. It cannot be combined with childcare vouchers or Universal Credit childcare support, you pick one scheme, and unlike most benefits it doesn't care which parent earns what, only that each stays under the ceiling, which is why a pension contribution by the higher earner is the standard rescue for a family about to cross it.
Worth knowing before you rely on the numbers
- The cap is applied quarterly (£500 per child per 3 months), so lumpy termly bills can waste cap in one quarter while leaving it unused in another. Pay into the account evenly if you can.
- The £100,000 test is per parent, per year, and re-confirmed every 3 months. A bonus that tips one parent over ends the top-up for the whole household, the bonus calculator and salary sacrifice pages cover the fix.
- Free childcare hours (15/30 hours) are a separate scheme with the same £100,000 cliff, losing both at once is what makes the threshold so expensive to cross.
Figures checked 2026-08-28 against gov.uk/tax-free-childcare. Method on the about page.