Tax-Free Childcare for 2027/28 — the top-up structure (20% of the total, capped at £2,000/£4,000 per child per year) is expected to be unchanged, as these caps have never been uprated since the scheme launched. Eligibility earnings thresholds are linked to the National Living Wage and will update when the April 2027 NLW is confirmed, which normally happens at the Autumn Budget/Statement before the tax year starts.
Provisional guidance — last reviewed September 2026. As of today, HMRC has not published confirmed 2027/28 Tax-Free Childcare figures; the 2026/27 tax year (rates below, uprated April 2026) is the latest confirmed position. The £2,000/year government top-up cap is unchanged from 2026/27 and, based on the scheme’s history, is likely to remain unchanged in 2027/28 — but this is not yet formally confirmed for that specific year. The minimum earnings threshold (linked to NLW) will update in line with the April 2027 NLW once announced.
Tax-Free Childcare — Confirmed 2026/27 Figures (basis for the 2027/28 outlook)
| Government top-up rate | 20% of the total in your account (£2 for every £8 you pay in) |
| Maximum top-up per child (standard) | £2,000/year (£500/quarter) |
| Maximum top-up per disabled child | £4,000/year (£1,000/quarter) |
| Your contribution to get max top-up | £8,000/year per child |
| Total in account (max) | £10,000/year per child |
| Child age limit | 11 or under (16 or under if disabled) |
| Income cap (each parent) | £100,000 adjusted net income/year |
| Minimum earnings (2026/27 basis) | 16 hrs/week at the National Living Wage — £12.71/hour from April 2026, around £203/week (roughly £2,644 over a 13-week quarter); the 2027/28 figure will change once the April 2027 NLW is confirmed |
How Tax-Free Childcare Works
- Open a Tax-Free Childcare account at childcare.gov.uk
- Pay in from your bank — up to £2,000 per quarter per child
- Government tops up 20% of the total — e.g. pay in £200, receive £250 in your account
- Pay your provider directly from the account
- Reconfirm eligibility every 3 months
Worked Example — Two Children
| You pay in (per child, per year) | £8,000 |
| Government top-up per child | £2,000 |
| Total in account per child | £10,000 |
| Two children total in account | £20,000 |
| Government contribution total | £4,000 |
Can I Use Tax-Free Childcare? — Decision Guide
| Your situation | Best childcare support |
|---|---|
| Working, not on UC/Tax Credits, income under £100k | Tax-Free Childcare |
| On Universal Credit | UC childcare (up to 85% of costs) |
| On Tax Credits | Tax Credits childcare element (up to 70%) |
| On childcare vouchers (pre-October 2018 employer scheme) | Vouchers — cannot switch to TFC |
| Self-employed, variable income | Tax-Free Childcare (use quarterly average) |
| High earner — one parent over £100k | Not eligible |
Tax-Free Childcare and Free Hours
| Child’s age | Free hours entitlement | Tax-Free Childcare |
|---|---|---|
| 9 months – 3 years (working parents) | 30 hours/week (fully rolled out since September 2025) | Yes — for paid hours/costs above free entitlement |
| 3–4 years (all children) | 15 hours/week | Yes |
| 3–4 years (working parents) | 30 hours/week | Yes — for extras above 30 hours |
| 5–10 years | None | Yes — after-school, holiday clubs, childminders |
Which Childcare Providers Are Eligible
Childcare providers must be registered with their relevant regulator to accept Tax-Free Childcare payments:
| Country | Regulator |
|---|---|
| England | Ofsted |
| Scotland | Care Inspectorate |
| Wales | Care Inspectorate Wales |
| Northern Ireland | Health and Social Care Trust |
Eligible providers include: nurseries, childminders, after-school clubs, holiday clubs, and nannies — provided they are Ofsted-registered (or equivalent). Not all childminders accept TFC — check with them before opening an account.
What Happens if Your Income Changes
Tax-Free Childcare is confirmed quarterly. If your income varies (particularly for self-employed people), you reconfirm eligibility every 3 months. If your income drops below the minimum earnings threshold in one quarter, you can still use the funds already in the account — but you cannot add more until your earnings recover above the threshold.
If you or your partner temporarily earn over £100,000 in a quarter (e.g. due to a bonus), you will not qualify for that quarter — HMRC will notify you. You can reapply the following quarter if income returns below the cap.
Employer Childcare Vouchers vs Tax-Free Childcare
Some employers still offer childcare vouchers through salary sacrifice schemes (closed to new entrants from October 2018). If you are already in a voucher scheme:
| Childcare Vouchers | Tax-Free Childcare | |
|---|---|---|
| Annual saving (basic rate taxpayer) | Up to £933/year | Up to £2,000/year per child |
| Higher rate taxpayer saving | Up to £1,196/year | Up to £2,000/year per child |
| Eligibility | Open to existing members only | Both parents working |
| Children’s age | Up to 15 (16 if disabled) | Up to 11 (16 if disabled) |
For most families, Tax-Free Childcare is now more generous — but you cannot receive both. If you are still on childcare vouchers, calculate which is better for your situation before switching.