With the Easter holidays a matter of weeks away, there’s good news for employees either starting new jobs or returning to work after parental leave: changes introduced last Autumn mean it’s now possible to benefit from additional weeks of eligibility for Tax Free Childcare (TFC).
TFC can help working parents and guardians to pay for approved childcare, such as childminders, nurseries and after-school care, but also holiday clubs outside of term-time. This can help employees balance work and family life, and may even allow them to work more hours by enabling them to fund longer childcare hours.
What is Tax Free Childcare?
TFC is a Government-backed scheme allowing parents to save money on the cost of childcare, as a replacement for childcare vouchers (which are now closed to new entrants).
The scheme is available for eligible parents until 1st September after their child turns 11, or 16 if the child is disabled.
Parents need to set up an online account and add their payments into it. Their contributions into the TFC account are then topped up by the Government with the equivalent of basic rate tax. This means that for every £8 working parents pay into their account, the Government adds an extra £2. The Government will make top ups in this way up to a maximum of £500 a quarter for each child, or £1,000 a quarter if the child is disabled.
TFC is available to working parents earning at least the National Minimum Wage but not more than a higher income threshold of £100,000. Parents who started self-employment in the past 12 months re not subject to the minimum earning requirement. The £100,000 upper threshold applies to either parent in a two-parent household and is based on their adjusted net income, so parents can make adjustments for gift aid donations and pension contributions. Further details on eligibility for TFC are available online.
The ATT’s short video on TFC sets out some key information about the scheme.
Longer timescales for new applicants
Until mid-September 2025, parents and guardians had to wait until 31 days before starting work in order to join TFC. But new starters and those returning to work from maternity, paternity, shared parental or adoption leave can now sign up for TFC further ahead.
Parents and guardians returning to work between 1 February 2026 and 30 April 2026 can apply for TFC from 1 January 2026. Those starting or resuming work between 1 May 2026 and 30 September 2026 can apply from 1 April 2026.
Benefits of TFC for working parents
A recent research project into TFC, commissioned by HMRC, reveals that:
- Roughly half of households surveyed were able to either maintain or increase their working hours thanks to TFC.
- Shift workers (those working outside 8am to 6pm and/or working weekends) tend to derive more benefit from TFC than those working ‘conventional’ hours.
- Parents with children aged 5 or above reported that TFC helps them work more regular hours, but not necessarily more hours in total.
- TFC helps parents of children with disabilities to work more regular hours, as well as providing greater flexibility to move jobs or change careers.
How to apply
A handy step-by-step guide to TFC takes potential applicants through eligibility, how applying for TFC might affect other benefits, making the claim, and the requirement to confirm every quarter that their details are still up-to-date. Details of other childcare support options are also available online.
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