Tax-free childcare

Introduction to Tax-free childcare

Tax-free childcare is a UK-wide government scheme so it covers England, Scotland, Wales and Northern Ireland. The scheme runs through an online childcare account which you can pay money into to cover the cost of childcare with a registered provider. There is an offline option for those who are unable to use the online service (via the childcare helpline).

You pay money into the online account and the government adds money (called a top-up) to the account. You can then use the account to pay for your childcare, providing your childcare provider is registered to accept payments from the scheme. You can only pay out for childcare where the main reason for it is to enable you to work.

Once you have claimed tax-free childcare for your first entitlement period, you must re-confirm your eligibility at the end of each three-month entitlement period for your tax-free childcare to continue. Your first entitlement period begins on the day HMRC confirm you are an eligible person. Each entitlement period usually lasts for three months, although HMRC can vary the duration by up to two months (the related top-up is adjusted to match the changed entitlement period). This usually only happens in relation to a first entitlement period, when a subsequent child is added to the claim or to align entitlement periods where existing separate claimants form a joint household.

At the date you make your declaration for tax-free childcare, you must be responsible for the child, which generally means the child lives with you. You can’t claim for a child who is absent from your household for more than 6 months, or who is looked after by a local authority or who is placed for adoption in the home of someone who is going to adopt them, under certain rules. There is more information about these rules on HMRC’s manual on the GOV.UK website.

Children will be covered by the scheme up until the last day of the week in which the 1 September following their 11th birthday falls. If they are disabled, this is extended to the last day of the week in which the 1 September following their 16th birthday falls.

To get help with tax-free childcare issues, you can contact HMRC’s child service helpline. The details are on the GOV.UK website.

Claiming tax-free childcare

Tax-free childcare claims are primarily made online via GOV.UK. If you do not have online access or find using the online system difficult you should contact the tax-free childcare helpline.

The online claim process for tax-free childcare is a joint application process with the free childcare offer. These are two separate government schemes but they share one online application – you can claim one or both of them during the application process. If you are only making a claim for free childcare, you should make sure you do not accidentally claim tax-free childcare at the same time.

If you claim tax-free childcare whilst you are also claiming universal credit,  HMRC have told us that whilst your tax-free childcare account will remain active for the usual three-month entitlement period and you cannot close it immediately, this should not prevent you from being allowed to claim universal credit if you need to but we recommend you speak to a welfare rights adviser before claiming universal credit in these circumstances.

You will need a Government Gateway account before you can apply for tax-free childcare. If you already have a Government Gateway account, you can sign in on the first page. If you do not have a Government Gateway account the process has an option to create one, and gives links to help if you have forgotten your ID or password.

If you have problems opening or operating your account see our problems guidance below.

We explain more about the Government Gateway in our digital services guide.

Problems with tax-free childcare

If you have problems when using the online service, you should first contact the tax-free childcare helpline.

If you have been affected by technical issues and this meant you incurred costs (for example, nursery late payment fees), you may be entitled to compensation via a one-off top-up payment. HMRC will also consider refunding any reasonable costs directly caused by the service not working as it should, mistakes or unreasonable delays.

You can claim compensation by writing to Childcare Services, HM Revenue and Customs, BX9 1GR.

You should include the following information in your letter:

• Your full name
• Your home address
• Your National Insurance number
• A brief description of the issues you have had
• Any costs you have incurred as a result
• Your bank name, account number and sort code
• Copies of receipts for payments to your childcare provider (if relevant)

We recommend that you send it by recorded delivery or at the very least ask the Post Office for proof of postage. You should also keep a copy of your letter.

If you are eligible for compensation, HMRC should write to you and make a payment directly into your bank account.