HMRC has confirmed that 868,000 families are benefiting from a £2,000 top-up payment under the Tax-Free Childcare scheme, a Labour government initiative. The tax authority reports that more parents than ever are using the scheme to save on childcare costs.
Record Number of Families Benefitting
The government has funded nearly £600 million in Tax-Free Childcare top-up payments for the 2025-26 financial year, according to HMRC. Latest figures show a record 868,095 families are taking advantage of the scheme, saving thousands on childcare last year.
Tax-Free Childcare is a government-funded top-up scheme used to pay for approved childcare 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.
How the Scheme Works
Once a Tax-Free Childcare account is opened, for every £8 deposited by parents, the government adds £2. Parents can receive up to £500 every three months (or £1,000 if their child is disabled) to help cover childcare costs.
The funds can be used for approved childcare, including before or after-school clubs, childminders, holiday activity clubs, and specialist equipment for disabled children.
Eligibility Criteria
Families are eligible if they have a child aged 11 or under, with eligibility ending on 1 September after their 11th birthday. For disabled children, families can receive up to £4,000 annually until 1 September after their 16th birthday.
Additional criteria include: parents earning at least the National Minimum Wage or Living Wage for 16 hours a week on average, each earning no more than £100,000 per year, and not receiving Universal Credit or childcare vouchers.
Tax-Free Childcare can be used alongside the free childcare hours offer if eligibility requirements are met.
Official Comment
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.”
