Tax-Free Childcare and childcare vouchers at holiday clubs, explained

Tax-Free Childcare in plain English

Tax-Free Childcare is a government top-up scheme. You open a free childcare account on GOV.UK, and for every £8 you pay in, the government adds £2. You then pay your childcare provider directly from that account. The top-up is worth up to £500 every three months, £2,000 across a year, per child, with higher caps for disabled children. That quarterly rhythm matters for holiday clubs: a whole summer paid in one go can outrun a single quarter's top-up, so paying into the account across the months beforehand stretches it further.

It covers children up to age 11 (usually until the 1 September after their 11th birthday, and longer for disabled children), and it can be spent on registered childcare generally, which includes holiday clubs, wraparound care and childminders, not just nurseries.

Eligibility, broadly: you, and your partner if you have one, each need to be working and have income of £100,000 a year or less (the test is your adjusted net income, which is not always the same as your salary), with a minimum-earnings floor at the other end. The rules have edges, so run the eligibility checker on GOV.UK rather than assuming either way, and note that you have to reconfirm your eligibility every three months.

Childcare vouchers are different

Childcare vouchers were the older, salary-sacrifice version run through employers. The scheme closed to new joiners in October 2018, so you cannot sign up now, but parents already in a scheme can keep using vouchers while they remain eligible and their employer still runs it. Vouchers can also only be spent with registered providers.

You cannot keep receiving childcare vouchers once you move to Tax-Free Childcare, and the switch is one-way: leave the voucher scheme and you cannot rejoin it later. Vouchers you have already built up stay spendable, though, so check your balance rather than rushing to use it. If you are in a voucher scheme now, compare the two on the government's Childcare Choices site before you move.

The per-venue rule that catches parents out

These schemes can only be used where the setting is registered with Ofsted or the equivalent regulator and the provider has signed up to receive scheme payments, and registration is per venue, not per provider. The same club brand can have one venue where Tax-Free Childcare works and another where it does not, entirely legitimately, simply because registration is still in progress at one of them.

At Tech Tigers it depends on the venue. St Dominic's in Brewood is Ofsted registered and accepts Tax-Free Childcare. Woodthorne is awaiting Ofsted registration, so we cannot accept Tax-Free Childcare there yet. Whoever you book with, ask that per-venue question before you rely on the top-up.

Getting the timing right

Set the account up before the holidays rather than the week you need to pay: applications and payments can take a few days to clear, and reconfirmation windows have a habit of falling at awkward moments. And remember you cannot get Tax-Free Childcare and Universal Credit at the same time, whatever your Universal Credit is paid for, so if you claim it, compare the two kinds of childcare support on Childcare Choices before opening an account.