Tax-Free Childcare is a scheme that runs directly between parents and the government. 

Eligible parents can create an account for each of their children and for every £8 the parents add, the government will top up £2, up to £2,000 topped up per child per year. 

To be eligible, the child must be 11 years old or under (as opposed to 15 for Childcare Voucher users), and both parents must be working. Neither parent can be earning more than £100,000 per year.

Is it better or worse than Childcare Vouchers?

Some parents will be better off under the new scheme, but a lot of others will fare better with Childcare Vouchers. The differences come down to each family’s circumstances – such as number of children, total income, childcare costs, and their plans for parental leave or other breaks from work.

If a parent who is registered for Childcare Vouchers decides to move over to Tax-Free Childcare, they will be unable to re-register for Childcare Vouchers. 

Therefore, it's really important that they have given careful consideration before switching from Childcare Vouchers to Tax-Free Childcare.

Read more about Understanding Tax-Free Childcare and how it compares to Childcare Vouchers