Tax-Free Childcare - up to £2,000 a year per child: how it works and who qualifies

If you are paying for childcare in the UK, Tax-Free Childcare is the government's main scheme for working parents — and it is often missed by directors and the self-employed who assume it is only for employees. For every £8 you pay into your childcare account, the government adds £2. You then pay your childcare provider from the account.

How much is it worth? The top-up is worth up to £500 every three months for each child — up to £2,000 a year. If your child is disabled, the limits double: up to £1,000 every three months (£4,000 a year).

Who qualifies? You and your partner (if you have one) must each be working, and expect to earn at least £2,643.68 before tax over the next three months if you are 21 or over. One detail that catches out company directors: dividends, interest, property income and pension income do not count toward that minimum — so make sure you have enough PAYE income. In addition, neither parent's adjusted net income can be over £100,000, and your child must be 11 or younger (16 if disabled).

What to know before you apply: You cannot get Tax-Free Childcare at the same time as Universal Credit or childcare vouchers, and it only works with approved childcare providers. You set up the childcare account and apply on GOV.UK, then reconfirm your eligibility every three months.

With childcare costs where they are, this one is worth a look — plenty of families are entitled and simply never claim.