Goverment Tax-Free Childcare Scheme


Childcare is a must for every child and it can very expensive. Many working parents leave their children with their grandparents to cut down costs, but if that is not an option for you, you can take advantage of the Tax-Free Childcare (TFC) scheme. There is ample help available from the government as well as employers in the form of childcare vouchers, to make childcare more affordable for working parents.

What is the Tax-Free Childcare (TFC) scheme and how it Works?

The government has introduced a new childcare support scheme andthis scheme will offer larger tax benefits to the parents compared to the previous program.For every 80p you spend, the government will top this up with 20p, which means the government will pay 20 percent of your childcare costs. The scheme would offer up to £2,000 of savings per child per year and there is no limit on the number of children you can claim for. Since autumn 2015, the employers are no longer held responsible to offer childcare benefits, since the parents can get tax-free benefit directly from the government. Parents who are already using childcare vouchers will be able to continue with their employer's scheme until their children turn 15. Parents willing to enrol with the new Tax Free Childcare can buy them online from Parents can pay at any point of time and get a top up for the amount they pay. You can pay to the childcare provider directly through the online account.

All registered childcare providers will be accepted under this scheme and these include:

  • Nurseries
  • Nannies
  • Child-minders
  • Crèche
  • Au Pairs and many more

Benefits of the Tax-Free Childcare (TFC) Scheme

There are many benefits that parents will get by enrolling on to the new childcare voucher scheme introduced by the government. Almost 2 million families will be able to get benefits from the new childcare vouchers. The current tax-free benefit will be available to twice as many families as currently using the Employer Supported Childcare vouchers, such as Busy Bees, Edenred and Computershare Vouchers Services to name a few.

Unlike the Employer Supported Childcare vouchers, parents will not have to depend on their employers to get their childcare benefits. Not only working parents, even those who work part time, those on maternity/paternity leave or those willing to start their own business will also be included under the current scheme. The amount you save with help of Tax Free Childcare will depend on the childcare costs. But those who receive childcare costs in Tax Credits will not be able to use the Tax-free Childcare Scheme.

The Tax Free Childcare will be very beneficial for families with two children, but families having one child may not find the scheme as beneficial. So depending on the circumstances of the individual families, they will have to choose between childcare vouchers and Tax Free Childcare scheme. With help of the Tax Free Childcare you can give your children the best care and still keep your costs low.