Childcare Cost Calculator
Government support for childcare in the UK comes through two largely separate schemes — free hours for eligible children, and Tax-Free Childcare, which tops up whatever you pay directly. Most working parents can use both at the same time, but the rules for each are different enough that it is easy to miss part of what you are entitled to. This calculator estimates your net childcare cost after applying both.
Childcare Cost Calculator
Calculate childcare costs and Tax-Free Childcare savings for 2026/27.
Free hours entitlement and Tax-Free Childcare eligibility depend on employment status, income, and child age. Check gov.uk for your specific entitlement.
The £100,000 Cliff Edge
Tax-Free Childcare and the expanded free hours both come with a hard income limit: if either parent has an adjusted net income over £100,000, the household loses eligibility for both schemes entirely — not tapered gradually, but removed completely once either parent crosses that single threshold. This creates a genuine cliff edge where a small pay rise pushing one parent just over £100,000 can cost a family thousands of pounds in lost childcare support, often outweighing the pay rise itself. Increasing a pension contribution through salary sacrifice is a common way families manage this specific threshold, since it can bring adjusted net income back under £100,000 without reducing take-home pay by the same amount — our Salary Sacrifice Calculator shows the effect of a given contribution on your taxable income.
This differs from the Personal Allowance taper, which reduces gradually between £100,000 and £125,140 — childcare support has no such gradual zone, making it one of the sharpest single-threshold effects anywhere in the UK tax and benefits system, and one worth planning around deliberately rather than discovering after the fact.
Free Hours Explained (There Are Two Different Schemes)
All children get access to some free hours from a young age, currently starting at 9 months old, regardless of parental working status — this is the universal entitlement. On top of that, working parents who each earn at least the equivalent of the National Minimum Wage for roughly 16 hours a week, and meet the income limit above, can access an expanded entitlement bringing the total free hours considerably higher. These free hours are generally usable during term time, typically calculated across 38 weeks of the year rather than all 52, which is worth factoring in for childcare that runs through school holidays too.
Many nurseries let the free hours entitlement be “stretched” across all 52 weeks rather than just 38 term-time weeks, spreading the same total value more thinly across the year for a lower but more consistent weekly saving — worth asking your specific provider about, since not all offer this option and the calculation this tool uses assumes standard term-time delivery.
How the 20p-for-80p Top-Up Actually Works
Tax-Free Childcare works differently from free hours — rather than free time, it tops up money you pay into a dedicated online childcare account: for every 80p you pay in, the government adds 20p, effectively a 20% top-up, up to a maximum of £2,000 support per child per year (£4,000 for a disabled child). Both parents in a couple generally need to be working and earning at least the minimum threshold to qualify, and it is available alongside free hours, covering costs like the portion of nursery fees free hours does not stretch to, or childcare for a child too young for free hours yet.
Money paid into the childcare account, including the government top-up, can only be spent on registered childcare — it cannot be withdrawn for other purposes without losing the government contribution, so it is generally sensible to pay in only what you expect to actually spend on childcare in the near term rather than depositing a larger amount speculatively.
When Universal Credit Might Pay More Than Tax-Free Childcare
Families receiving Universal Credit are not eligible for Tax-Free Childcare at the same time — the two are mutually exclusive, and it is worth comparing which one actually works out better rather than assuming either is automatically the right choice. The Universal Credit childcare element can cover up to 85% of eligible childcare costs, which for lower-income working families can be more generous overall than the 20% Tax-Free Childcare top-up, even though Tax-Free Childcare has a higher effective income ceiling. Our Benefits Calculator estimates Universal Credit entitlement including this childcare element, so the two routes can be compared side by side rather than guessing which applies.
Seeing Both Schemes Together
A family with one child in nursery three days a week at £70 a day, using 15 free hours during term time, sees the free hours reduce the billable time directly, while Tax-Free Childcare then tops up whatever remains payable — £2 for every £8 paid, up to the £2,000 annual per-child cap. Combined, the two schemes together can meaningfully reduce a bill that would otherwise run into several hundred pounds a month, though the exact saving depends heavily on how many days are used, the hourly rate charged, and how much of the £2,000 annual cap has already been used earlier in the year.
Frequently Asked Questions
Can grandparents or informal carers count toward free hours?
No — free hours and Tax-Free Childcare only apply to registered, Ofsted-regulated childcare providers, such as nurseries, childminders and after-school clubs, not informal care arrangements with family or friends.
What happens if my income changes during the year?
Tax-Free Childcare eligibility is reconfirmed every three months, so a change in income can affect your entitlement at the next reconfirmation point rather than immediately, giving some room to adjust before support is affected.
Do self-employed parents qualify?
Yes, provided they meet the minimum income requirement, though newly self-employed parents have a start-up period where the usual minimum income rule is relaxed while the business becomes established.
Can I use free hours and Tax-Free Childcare with different providers?
Yes — free hours are tied to a registered childcare provider you choose, and Tax-Free Childcare payments can be made to any Ofsted-registered provider through your online childcare account, so they do not need to be the same setting.
Are workplace childcare vouchers still available?
The original salary sacrifice childcare voucher scheme closed to new joiners some years ago, though parents who joined before it closed and have stayed with the same employer continuously may still be able to use it instead of Tax-Free Childcare — worth checking with your employer if this applies to you.
Does the £100,000 limit apply to combined household income?
No — it applies to each parent individually. A household where one parent earns £120,000 and the other earns nothing still loses eligibility, even though a household where each parent earns £95,000 (a higher combined total) would not.
Important Information
This calculator provides an estimate for general information purposes only and does not constitute financial or benefits advice. Eligibility for Tax-Free Childcare, free hours and Universal Credit depends on your full individual circumstances and is assessed directly by HMRC or the DWP. Apply and check current eligibility via childcarechoices.gov.uk. See our Disclaimer for further information.