Help with childcare costs
There are four separate ways the government helps with childcare in England, and most families qualify for more than one. They stack in some combinations and cancel each other out in others, which is where people lose money.
What are you actually entitled to?
Put in what you spend and we will show the Tax-Free Childcare top-up and what the funded hours are worth at typical local rates. Nothing is sent anywhere.
Funded hours are worth 38 weeks a year, so the yearly figure is the term-time value. Tax-Free Childcare adds £2 for every £8 you pay in, capped at £500 per child every three months. Settings often charge separately for meals and consumables, which this does not include.
The four schemes, in one place
Work out which of these you qualify for before you ring a single nursery. The funded hours are the biggest by a distance, and the one most often left unclaimed.
| Scheme | What you get | Who it is for |
|---|---|---|
| 30 funded hours | 30 hours a week, 38 weeks a year | Working parents, child 9 months to 4 |
| 15 funded hours | 15 hours a week, 38 weeks a year | All 3 and 4-year-olds; some 2-year-olds |
| Tax-Free Childcare | £2 added for every £8 you pay in, up to £2,000 a year | Working parents, child 11 or under |
| Childcare vouchers | Salary sacrifice, closed to new joiners | Only if you joined before October 2018 |
| Universal Credit childcare | Up to 85% of costs, paid back after you pay | Universal Credit claimants |
What cancels out what
- Funded hours + Tax-Free Childcare: yes. You can use both. Take the funded hours, then pay for any extra hours through the Tax-Free Childcare account.
- Tax-Free Childcare + childcare vouchers: no. It is one or the other. If you apply for Tax-Free Childcare you have to tell your employer to stop the vouchers, and you cannot rejoin the voucher scheme afterwards.
- Tax-Free Childcare + Universal Credit: no. Claiming Tax-Free Childcare stops your Universal Credit. For most families on Universal Credit the childcare element is worth more, so check before you apply.
- Funded hours + Universal Credit: yes. These work together.
The thing nobody tells you
“Free” hours are paid to the setting at a rate the council sets, and that rate is often below what the setting charges. Most nurseries make up the difference with charges for meals, nappies and consumables, which is allowed. A 30-hour place can still cost you £30 a week.
The headline hours are also over 38 weeks, not 52. Spread across the whole year, 30 hours a week becomes about 22.
Questions people ask
Can I get both free hours and Tax-Free Childcare?
Yes. They are designed to work together. Use the funded hours first, then pay for any additional hours out of a Tax-Free Childcare account and get the 20% top-up on those.
Is childcare actually free?
Rarely completely. The funded hours cover the childcare itself, but settings can charge separately for meals, nappies, sun cream and trips, and many do because the council rate does not cover their costs.
What if I earn over £100,000?
You lose both the 30 funded hours and Tax-Free Childcare if either parent's adjusted net income goes over £100,000. You keep the universal 15 hours for a 3 or 4-year-old, which has no income test.
When should I apply?
Apply the term before you need the place. Codes have to be given to the setting before the term starts, and nurseries with waiting lists will want to know well in advance.