Tax-free childcare

Working parents can access tax free childcare. This government initiative means that they can pay up to £2000 a year in childcare costs without paying tax, or £4000 if their child is disabled. The scheme is for parents of children up until the age of 12, or 17 for disabled children. To qualify, parents will have to be in work, and each earn at least £120 a week (roughly equivalent to 16 hours per week at the minimum wage). Each parent must not have income over £100,000 per year.

All you need to know about Tax-Free Childcare

A back to basics webinar for all activity and childcare providers was delivered by Hempsall's in May 2023. This webinar is useful for early education and childcare settings, out of school, and activity club providers across the UK.  It provides an overview of all the information providers need to know to sign up and offer Tax Free Childcare (TFC) to families to help them pay for the childcare they need.

A recording of the webinar is available below.

What do I need to do?

Only registered or approved childcarers can sign up to offer Tax-Free Childcare. In England, this means you must be registered with Ofsted. In Wales, you must be a registered with Care Inspectorate Wales (CIW), and approved nannies with CIW can also offer Tax-Free Childcare. 

You should already have received a letter from HMRC inviting you to register your setting as a Tax-Free Childcare provider. You must sign up to receive payments from parents. 

Unique Tax Reference

You’ll need your 10-digit Unique Tax Reference (UTR) number to sign up for Tax-Free Childcare. This is the number that HM Revenue and Customs (HMRC) gave you when you first registered as being self-employed. You can find your UTR on any HMRC communications, for example, your tax statement or payment reminder, or by logging onto your Personal Tax Account.

If you can’t find your UTR number, HMRC can send it to your address. For more information, call the childcare service helpline on 0300 123 4097.

When you sign up to offer Tax-Free Childcare, you'll need to enter the details of your business bank account. Parents will then be able to send you payments directly from their Tax-Free Childcare accounts to your bank account via BACS.

Each child will have a Tax-Free Childcare reference number. Parents should let you know their reference number to help you identify their payments.

Help for parents

This downloadable leaflet is for you to print and give to parents and helps explain how they can sign up.

For more information about childcare options and other funding, including tax fee childcare, visit www.childcarechoices.gov.uk. Check out their communications toolkit with lots of useful resources for parents and providers including the journey to accessing Tax-Free Childcare funding, tips for employers and how to apply if you're a foster parent.