HMRC’s £600m fund is already helping over 800,000 families (Image: Getty)
The Government has allocated almost £600 million to benefit a specific group in the UK. Thousands of UK households with young children can now save on their childcare bills thanks to the Government’s tax-free childcare top-up payments in 2025-26.
According to the latest figures, 868,095 families are benefitting from the scheme and saved thousands of pounds on childcare costs last year. HMRC is now encouraging those who may be eligible to check as soon as possible to help them save ahead of the summer holidays.
The top-up fee scheme can be used to pay for approved childcare for children aged 11 or under, or up to 16 years old if the child has a disability. According to HMRC working parents can save up to £2,000 a year per child or £4,000 if their child has a disability.
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.”
To get things running, you will need to set up a childcare account that allows both you and the Government to pay into, and then you can use the money to pay to your childcare provider. For every £8 you pay into the account, the government will top it up by £2.
The Government is offering financial help for parents with childcare costs (Image: Getty)
The total top-up you can get for each child is £500 every 3 months, up to £2,000 a year. This amount goes up to £1,000 every 3 months, up to £4,000 a year, if your child is disabled.
Your childcare provider must also be signed up to the Tax-Free childcare scheme, and so before you apply, make sure to check with your provider that they are already signed up to the scheme.
How it works
Once your account is set up, you can pay money into it by direct debit, standing order or bank transfer.
Your payment will usually appear in your childcare account within one working day, and the Government’s payment is added at the same time.
You can then use the funds to pay your childcare provider.
You must sign in to your childcare account every 3 months to confirm you’re still eligible. If you do not, your Tax-Free Childcare will stop.
What can you use Tax-Free childcare for
- Childminders, nurseries and nannies
- After school clubs, play schemes, and holiday clubs
You must use an ‘approved childcare provider’ to get Tax-Free childcare, so your provider must be one of the following:
- A registered childminder, nanny, playscheme, nursery or club
- A childminder or nanny with a registered childminder agency or childcare agency
- A registered school
- A home care worker for a registered home care agency
If your child is disabled, then as well as using the extra money to help pay for more hours of childcare, you can also use it to pay for your childcare provider so they can get specialist equipment for your child.