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Funding & money

Setting up your Tax-Free Childcare account: a step-by-step

Opening a Tax-Free Childcare account takes 20 minutes if you have the paperwork ready. Here’s exactly what to do, what to gather first, and how to avoid the most common rejections.

Reviewed by the Nursery Advice editorial teamLast updated 2 July 2026Next review 30 November 2026Editorial standards

Tax-Free Childcare (TFC) gives you a 20% government top-up on what you spend on childcare — up to £2,000 per child per year. To use it, you and your partner each need to open and maintain a childcare account on gov.uk.

What to have ready before you start

  • Your National Insurance number, and your partner’s if you have one.
  • A Government Gateway ID (the one you use for personal tax) — or create one in the same flow.
  • Your bank details for any refunds.
  • Details of your work and likely income for the next 3 months.
  • Your child’s name, date of birth and date you want childcare to start.

Step-by-step

To set up a childcare account you’ll register with HMRC via gov.uk — it’s the same government childcare account that later handles both your Tax-Free Childcare top-ups and your 30 funded hours code.

  1. Go to gov.uk/apply-30-hours-free-childcare — the same flow opens both TFC and 30-hour eligibility.
  2. Sign in with Government Gateway. Set up 2-step verification.
  3. Answer the work and income questions — the system asks for the next three months, not the past three.
  4. Confirm your partner’s details if applicable. They’ll get a notification to confirm.
  5. You’ll see your eligibility result — usually within minutes. If it asks for more checks, it can take 7 days.
  6. Add your child to the account, set up the standing order / bank transfer details, and you’re ready to pay your nursery.

Using the account

  • You pay money in (debit card or bank transfer) — government tops up automatically.
  • Pay your nursery from the account directly. Your nursery needs to be signed up to TFC — most are, including every TFC-registered setting listed on Nursery Advice.
  • Reconfirm every 3 months. Missing this is the most common reason families lose eligibility — see our login & reconfirmation guide.
  • Money left over when your child is no longer eligible can be withdrawn — the government takes its top-up back.

Common reasons applications fail

  • Your details on Government Gateway don’t match HMRC’s records. Sort the mismatch via the HMRC personal tax helpline first.
  • You answered for the past 3 months instead of the next 3.
  • Either parent earned over £100,000 in adjusted net income (or expects to).
  • Your nursery isn’t yet signed up to receive TFC. Ask them to register — it’s a 10-minute setup. If you’re still choosing a provider, browse UK nurseries by area and filter for ones that already accept Tax-Free Childcare.

See your monthly bill after the top-up

Childcare cost calculator

Open full tool
England (outside London)
Estimated net cost
£3,163/ year
£264 / month · £61 / week
  • Net to you£3,163
  • Funded hours£7,980
  • Tax-Free Childcare£332
Child's age

2 years

Days per week
Hours per day
Include hidden charges (£12/day)

Most nurseries charge a daily supplement for food, nappies, sun cream and trips on top of fees and funded hours. The England (outside London) average is around £12 per day your child attends. Toggle off if your nursery doesn't.

Term-time only (38 weeks)

Otherwise we use 51 weeks of nursery a year.

Both parents working

Each earning at least minimum wage and under £100k. Unlocks working-parent funded hours & Tax-Free Childcare.

Receiving Universal Credit

Unlocks the 85% UC childcare element instead of Tax-Free Childcare.

Frequently asked questions

Can grandparents pay into the account?
Yes — anyone can pay money in. The top-up still applies. It’s a popular way for grandparents to contribute to childcare costs.
What if I overpay one month?
No problem — unused money rolls over to the next quarter. You can withdraw it any time (the government withdraws its share).
Does the account expire?
It stays open until your child turns 11 (or 17 if they’re disabled). You stop being eligible if you go over the income limit or stop working.

Ready to find a brilliant nursery?

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About this guide & sources

Every numerical claim in this guide is sourced from UK government, NHS or recognised charity publications. We re-check each source on the article’s review date.

  1. GOV.UK — Tax-Free Childcare — sign in (retrieved 2026-05-26)
  2. Childcare Choices — Tax-Free Childcare overview (retrieved 2026-05-26)

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