Family
Tax-Free Childcare — The Government Pays 20%
Alex and Priya both work full-time. Their toddler's nursery costs £1,200/month. They open a Tax-Free Childcare account and pay £960/month into it. The government automatically tops up £240/month — that's £2,880/year of free money from the government, just for using the account.
The scheme is simple: for every £8 you put in, the government adds £2. The maximum top-up is £2,000 per child per year (£4,000 if disabled). Both parents must be working and earning at least National Minimum Wage for 16 hours/week, and neither parent can earn over £100,000.
£2,000/year per child
Maximum government top-up
CapyPay Top Tips
- You can't combine Tax-Free Childcare with childcare vouchers or Universal Credit childcare element — pick the best one
- If either parent earns over £100k, use pension contributions to bring adjusted income below £100k to qualify
- Top up consistently — the government matches every quarter, but unused allowance doesn't roll over between years
- Check your nursery/childminder accepts Tax-Free Childcare payments — most do, but verify first
- Don't forget the 30 hours free childcare for 3–4 year olds on top of this
→ Action: Apply at gov.uk/tax-free-childcare. Takes 10 minutes.