TFC01100 - Overview and purpose: overview and purpose of Tax-Free Childcare (TFC)
Overview of TFC
TFC was introduced in early 2017 to help eligible working parents with the cost of childcare. TFC is broadly available to parents of children aged 11 or under, or disabled children aged 16 or under, across the UK. To be eligible, a parent and their partner (if they have one) must expect to earn on average, at least a weekly amount equal to the National Minimum or National Living wage multiplied by 16 hours, and each have an adjusted net income of no more than £100,000 per year. A person can be eligible for TFC whilst they are using the 30 hours free childcare scheme in England, or any similar schemes provided by the Scottish, Welsh, or Northern Irish governments. A person is still eligible for a TFC account if they are still receiving childcare vouchers when they first apply. However, they cease to be eligible, and become liable to repay the top-up, if they do not give notice to their employer in the period of three months following their successful application to TFC.
Purpose of TFC
TFC helps people with their childcare costs enabling them to work or extend their working hours if already working. TFC is a method of giving support towards childcare costs at a rate that mirrors the basic rate income tax of 20%. For every £8 that is paid into a childcare account, the Government will pay in an extra £2 up to a maximum of £500 every three months (up to £2000 per year), or £1000 every 3 months (up to £4000 per year) if the parent has a disabled child.
How to apply and get more information
People who think they might be entitled to TFC can use the childcare calculator
to check what help they could get with childcare costs and which type of support may be best for them. There is a single application form for TFC, and 30 Hours Free Childcare and parents must make sure they are applying for the right scheme depending on their circumstances, particularly if they only want 30 hours and not TFC and are receiving tax credits.