Tax-Free Childcare Calculator United Kingdom

What Tax-Free Childcare is worth to a working family

Tax-Free Childcare pays a fixed share of registered childcare costs through an online account. You pay money in, the government adds its share automatically, and the provider is paid from the account. For many working families it is the largest saving available on a nursery or childminder bill.

The cap applies per child and per quarter, so a family with one expensive place loses part of the benefit while a family with two moderate places usually keeps all of it. The calculator shows what the top-up is worth on your bill and how much is lost because the bill has gone over the limit.

How Tax-Free Childcare works in practice

Pay in £8 and the government adds £2, so the top-up covers a fifth of the total childcare cost, not a fifth of what you pay in. That matters when comparing the scheme with salary sacrifice vouchers, where the saving depends on your tax rate.

Each child has a three-month entitlement period with a capped top-up; once the cap is reached, further payments get no top-up. Because the period resets rather than accumulates, a family with uneven costs, such as a large summer holiday club bill, can lose top-up in one quarter while leaving cap unused in another.

A child who qualifies as disabled has double the cap, quarterly and yearly. Qualifying depends on receiving Disability Living Allowance or Personal Independence Payment, or being certified as severely sight impaired, and the support lasts longer than the standard scheme, which ends in the September after the child turns eleven.

The earnings test

Both parents in a couple, or the single parent, normally have to be working and expecting to earn at least the minimum wage for sixteen hours a week over the next three months. The calculator turns that into a monthly figure for the age band you choose: £881.23 a month at the £12.71 National Living Wage.

The test looks forward, which makes it awkward. Maternity leave, sick pay, a term-time contract or a move to three days a week can put a parent below the line for a quarter even when yearly earnings look comfortable. Self-employed parents can average earnings over the tax year, and there is a start-up exemption in the first year of trading.

There is also a ceiling. If either parent has adjusted net income above £100,000, the household cannot use the scheme, and the loss is all at once rather than tapered. A bonus that takes one parent over the line removes the whole top-up for every child, which is a strong argument for a pension contribution that brings adjusted net income back down.

A worked example

Two children at £800 a month each cost £19,200 a year. The top-up is £320 a month, £3,840 a year, within the £2,000-per-child cap, so nothing is lost and you pay £1,280 a month. One child at £1,200 a month would earn £2,880 of top-up uncapped, but the cap limits it to £2,000, so £880 is lost and the effective discount falls to about 13.9%.

Reading the results

The main figure is the top-up for the year. The total childcare cost and what you pay show the effect on the household budget, and the monthly figures show the amount leaving your account each month.

Watch the top-up lost to the cap. If it is zero, the scheme is covering its full share. If it is large, extra childcare hours cost you the full price, which changes whether an extra working day pays for itself. The share of the bill covered falls as costs rise past the cap, so comparing it with 20% shows quickly whether the cap applies.

Making the most of the quarterly cap

The cap resets every three months and unused room is lost, so the timing of payments matters as much as the total. A steady bill all year needs no thought, but a heavy summer of holiday clubs and a light autumn can lose top-up in one period and leave room unused in another.

Pay in evenly rather than matching each invoice. Money stays in the account until you spend it, so a steady standing order that fills the quarterly cap builds a balance for the expensive months, all of it already topped up.

The entitlement period runs from the date you opened or last reconfirmed the account, not the calendar quarter, so check that date before planning. You can withdraw money if plans change, but the government’s share of anything you take out is returned to it.

How it interacts with everything else

Tax-Free Childcare does not combine with the Universal Credit childcare element, and opening an account ends that element. Universal Credit reimburses a much larger share of costs, so a household receiving it is usually better off staying with it.

It also cannot be used with employer childcare vouchers. Anyone still in a legacy voucher scheme keeps it only while they stay with the same employer and do not open an account, so the switch is one way.

The funded early education hours work alongside it: they reduce the invoice, and the account tops up whatever the provider still charges, including extra hours and consumables.

These figures are an estimate based on even monthly costs and current published limits. They are not personal financial advice; use your childcare account and provider invoices to confirm the position before committing to a place.

About This Tool: Tax Free Childcare

Tax free childcare: use this tool to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.