Tax-Free Childcare vs Other Support: Which Is Best for You?

Understanding your options

There are several government schemes to help with childcare costs, but you often cannot combine them. Choosing the right one could save you thousands of pounds a year.

Quick comparison

Scheme	Max saving per year	Who qualifies
Tax-Free Childcare	£2,000 per child	Both parents working, earning £8,670-£100,000 each
Universal Credit childcare	Up to 85% of costs	UC recipients, max £1,014/month (1 child)
30 hours free childcare	~£6,000	3-4 year olds, both parents working 16+ hours
Childcare vouchers (closed)	£933 (basic rate)	Existing members only

Tax-Free Childcare explained

For every £8 you pay into your Tax-Free Childcare account, the government adds £2. This means a 20% discount on childcare costs. The maximum government contribution is £2,000 per child per year (£4,000 for disabled children), paid quarterly in amounts up to £500.

When Universal Credit is better

If you receive Universal Credit, the childcare element can cover up to 85% of your childcare costs. This is often more generous than Tax-Free Childcare for lower-income families. However, you cannot use both at the same time.

Use our calculator

Our Tax-Free Childcare Calculator can show you exactly how much you would save. Enter your childcare costs and number of children to get an instant breakdown.