Tax-free childcare and help with childcare costs

How much does childcare cost?

The average cost of sending a child under the age of two to nursery or to a childminder in Great Britain is:

Childcare isn't cheap, and while the government has promised more support, parents with young children may be caught in a situation where they can't afford to go back to work.

In this guide, we explain the childcare schemes available to help parents - including free childcare and tax-free childcare. Whether you're working, not working, on a low income or higher income, there are several options to help you pay for childcare.

However, these options can't all be claimed at the same time, so you'll have to choose which one best suits your circumstances.

• Find out more: prepare for a growing family with our expert advice

Free childcare for children aged between nine months and four years old

If you live in England, you may be eligible for free childcare if your child is aged between nine months and four years old. Free childcare must be delivered via an approved childcare provider, and you'll need to apply for a voucher on the government website.

There are separate schemes for parents who are in work and parents claiming certain benefits.

Free childcare for working parents

The amount of free childcare you will receive depends on how old your child is. 

Children aged between nine months and two years currently get 15 hours of free childcare per week for 38 weeks a year.

If your child is three-to-four years old, you can get 30 hours of childcare per week for 38 weeks a year.  

In the 2023 Spring Budget, Chancellor Jeremy Hunt announced plans to extend 30 hours free childcare to parents of children aged as young as nine months to reduce childcare costs and encourage parents back into work. 

This has been rolled out gradually, with 15 hours childcare for two-year-olds introduced in April 2024, and extended to children aged nine months from September 2024. 

From September 2025, children aged nine months to four years old will all be eligible for 30 hours of childcare per week. 

Am I eligible?

You (and your partner, if you have one) must be in work, or getting parental leave, sick leave or annual leave. If you're employed, you must both earn at least national minimum wage or living wage for 16 hours a week. 

You will not be eligible if your child does not usually live with you, or you or your partner have an expected adjusted net income of over £100,000. 

How much will I get?

You claim free childcare via an approved provider, meaning you won’t get paid. Instead, funding is sent to your childcare provider by your local council and you’ll benefit from free services. 

Pros

• You can get up to 30 hours free childcare at the same time as claiming universal credit, childcare vouchers and tax-free childcare
• It takes 20 minutes to apply, and you'll find out if you're eligible to claim tax-free childcare with the same application.
• You can claim free childcare for foster children.

Cons

• Free hours may only be available within set times and sessions.
• You have to apply through your local council, so options depend on local availability.

Free childcare if you receive benefits

The amount of free childcare you will receive depends on how old your child is. 

If your child is two years old, you may be able to access 15 hours of free childcare if you receive one of the following benefits:

• Income support
• Income-based jobseeker's allowance
• Income-related employment and support allowance
• Universal credit: if you and your partner (if you have one) have a combined working income of less than £15,400 a year after tax
• The guaranteed element of state pension credit
• Support through part 6 of the Immigration and Asylum Act.

You may also be eligible if your child is:

• Looked after by a local council
• Has a current statement of special needs, or an education, health and care plan
• Gets disability living allowance
• Has left care under a special guardianship order, child arrangements order or adoption order.

All parents of three and four-year-olds can get 15 hours of free childcare, regardless of whether or not you’re working. However, you may be eligible for more free hours if you receive any of the following benefits:

• Incapacity benefit 
• Severe disablement allowance 
• Carer’s allowance  
• Limited capability for work benefit 
• Contribution-based employment and support allowance.

How much will I get?

You claim free childcare via an approved provider, meaning you won’t get paid. Instead, funding is sent to your childcare provider by your local council and you’ll benefit from free services. 

Pros

• Claiming free childcare does not affect your benefits. However, if you use the childcare element of universal credit, you can only claim for any childcare you need above the hours you receive via the free childcare scheme. 

Cons

• Free hours may only be available within set times and sessions.
• You have to apply through the local council where the childcare is based, so options depend on local availability.

What about the rest of the UK?

In Scotland, all three and four-year-olds are entitled to 30 hours free childcare a week during term-time. There is also a scheme for two-year-olds if you receive certain benefits and are on a low income. 

In Wales, all three and four-year-olds can get 30 hours of free childcare a week. The 30 hours is made up of a minimum of 10 hours of early education a week and a maximum of 20 hours a week of childcare. Two-year-olds may also be eligible for free part-time childcare through the Flying Start programme.

In Northern Ireland, three and four-year-olds get 12 and a half hours of free childcare per week during term time through a funded preschool place. Unfortunately, there are no schemes to provide free childcare for children under two in Northern Ireland.

Tax-free childcare

Tax-free childcare is a government scheme that pays working parents a 25% top-up based on what they pay for childcare. You can get up to a maximum of £2,000 a year, which is given when parents pay out at least £10,000.

Am I eligible?

You (and your partner, if you have one) must be in work, or getting parental leave, sick leave or annual leave. If you're employed, you must both earn at least national minimum wage or living wage for 16 hours a week.

If you're self-employed and started your business less than 12 months ago, the earnings limit doesn't apply to you.

If you're not in work, you may be eligible if you receive certain benefits and your partner is in work. For more information, see the government guidance on tax-free childcare.

How much will I get?

You can get up to £500 every three months for each child. 

The government will pay 25% of what you pay an approved childcare provider via an online account. The provider must be approved for you to get the 25%.

Pros

• You can claim tax-free childcare alongside free childcare if you're eligible for both.
• It only takes 20 minutes to apply online.
• As part of your application, you'll find out if you're eligible for free childcare.
• Self-employed workers are eligible.

Cons

• Foster children aren't eligible for tax-free childcare.
• You can't claim if you or your partner earn over £100,000.
• It's only for children aged 11 or under.
• If you're not working, you can only apply if you're due to re-start work in the next 31 days.
• If you have a partner, both of you must be working to be eligible.

• Find out more: how do Aldi and Lidl nappies compare?

Universal credit childcare element

Universal credit is a government benefit scheme for those who are out of work or on a low income. Universal credit replaced tax credits and other income-related benefits.

Am I eligible?

You must already be eligible to claim the main element of universal credit. 

To qualify for the childcare element, you must both be in work if you're part of a couple, unless one of you has limited capability for work, regular and substantial caring responsibilities for a severely disabled person or are absent in prison, hospital or residential care.

How much will I get?

You have to pay for your childcare costs yourself and report them to universal credit, and you'll then be reimbursed for some of the money. You can get up to 85% of childcare costs covered, up to a maximum of £1,031.88 per month for one child or £1,768.94 for two or more children.

Pros

• You get a higher proportion of childcare paid for than working tax credits.
• There is no set number of hours that you and your partner have to work.

Cons

• You could lose out if you have more than two children.
• You must tell the universal credit helpline if you stop working - and you can only claim childcare costs for a month after your job ends.
• You must have a job offer before you can claim again.

Find out more: how much universal credit will I get?

Working tax credit childcare element

The childcare element of working tax credit was designed to help parents on low incomes who were in work pay for childcare, to help them stay in employment.

Who was eligible?

You and your partner, if you have one, had to work at least 16 hours a week to be eligible. If one of you was not working, it had to be because they were either incapacitated, in hospital, in prison or entitled to carer's allowance.

How much was the childcare element worth?

You received up to 70% of what you paid for childcare, up to a maximum of £175 per week for one child, or £300 a week for two or more children. So you could have received up to £122.50 (one child) or £210 (two or more children) a week.

Childcare vouchers

The childcare voucher scheme is now closed to new applicants. If you're already enrolled, you may continue using the scheme for as long as your employer offers it.

Childcare vouchers are given out to employees by employers who decide to run the scheme. You swap your wages for the vouchers, which must be spent on approved childcare providers.

How much will I get?

You can take up to £55 a week of your wages as childcare vouchers. This means basic-rate taxpayers could gain £930 a year per parent, higher-rate taxpayers might get £624 a year and top-rate taxpayers can get £590.

Pros

• You can save on income tax and National Insurance payments, as the vouchers are taken out of your wages before tax.
• If you have already been given vouchers, there is no deadline for when you have to use them by.
• Only one parent needs to work to be eligible.
• It's for children who are aged 15 or under (as opposed to tax-free childcare, which is only for children under the age of 12).

Cons

• If you haven't already applied, you cannot enrol in the scheme.
• Whether you can continue to use the service depends on whether your employer continues to offer it.
• It's not available to anyone who is self-employed.
• You can't continue to claim if you take a career break for longer than a year.

Find out more: Which? Money podcast - childcare cost crisis