UK childcare benefits: the complete guide for working parents
Workplace nursery partnerships, Tax-Free Childcare, funded hours and childcare vouchers compared: who qualifies, how much each saves, which you can combine, and what changes above £100,000.
There are four main ways for working parents in the UK to get help with childcare costs. Each has its own eligibility rules, its own savings ceiling, and its own relationship with the others. Some can be combined. Some can't. And for parents earning over £100,000, most government support stops entirely.
This guide sets them all out in one place: what each option is, who qualifies, how much you can save, and which combinations work.
Quick answer: For most parents paying full-time nursery fees, a workplace nursery partnership saves the most. It's uncapped, while Tax-Free Childcare adds a maximum of £2,000 per child per year. Funded hours reduce the bill itself and work alongside either. Above £100,000 adjusted net income, Tax-Free Childcare and the working parent funded hours stop, leaving a workplace nursery partnership as the main tax-efficient option.
Scope note: The funded-hours rules in this guide are for England. Scotland, Wales and Northern Ireland run separate systems, so check your local guidance if you are outside England.
What childcare help can working parents get in the UK?
| Benefit | Who runs it | Income limit | Percentage saving | Savings cap | What it covers |
|---|---|---|---|---|---|
| Workplace nursery partnership | Employer | None | Up to 40% | Uncapped | Registered nursery fees |
| Tax-Free Childcare | Government | £100k adjusted net income | 20% | £2,000 per child per year (£4,000 if disabled) | Any Ofsted-registered childcare, including childminders, after-school and holiday clubs |
| Funded hours (15 or 30 hrs) | Government | £100k adjusted net income (30 hrs only) | Free hours (not a percentage) | 15 or 30 hours a week, 38 weeks a year | Registered nurseries, preschools and childminders |
| Legacy childcare vouchers | Employer (closed to new joiners Oct 2018) | Varies by tax band | Up to 42% | £55/week basic rate, less for higher earners | Registered childcare, for existing members only |
Workplace nursery savings are based on Gogeta's scheme and are shown after all costs. Savings with other providers may differ.
Each option is explained in full below. For which ones you can use together, see which combinations work.
What is a workplace nursery partnership?
A workplace nursery partnership is a salary sacrifice arrangement under s.318 ITEPA 2003 that lets employees pay nursery fees from their gross salary, before income tax and National Insurance are deducted. The tax exemption has been in statute since 1990.
The result: the nursery bill costs you significantly less than the headline figure, because you're paying with money that hasn't been taxed yet.
How does the saving work?
You pay your nursery fees from your gross salary, so you don't pay income tax or National Insurance on that money. The more tax you pay, the more you save.
With Gogeta, parents typically save:
- Basic rate taxpayers: 19% of their nursery bill
- Higher rate taxpayers: 35% of their nursery bill
- Additional rate taxpayers: 40% of their nursery bill
Who is eligible?
In order for the tax exemption to apply, your employer needs to enter into a partnership with your nursery.
The conditions for the exemption are set out in s.318 ITEPA 2003. Four conditions (A to D) must be met:
- Condition A: the child is yours, your stepchild, or a child you have parental responsibility for, and lives with you
- Condition B: care is delivered at a registered childcare setting (registered with Ofsted in England, the Care Inspectorate in Scotland, or Care Inspectorate Wales) on non-domestic premises — not a private home
- Condition C: the employer is wholly or partly responsible for financing and managing the provision of care
- Condition D: the arrangement is open to employees generally, or generally to those at a particular location
There is no HMRC application or approval step. The exemption applies automatically when the conditions are genuinely met. Gogeta helps employers meet the conditions.
What does it cover?
Workplace nursery partnerships cover registered nursery fees only. They cannot be used to pay:
- Nannies or childminders
- Nurseries that are not registered with Ofsted, the Care Inspectorate (Scotland) or Care Inspectorate Wales
Note for HR teams: Gogeta's model is designed to meet all four conditions, with genuine employer financing and documented management involvement. Read more on what compliance requires in practice.
What is Tax-Free Childcare?
Tax-Free Childcare (TFC) is a scheme in which the government 'tops up' childcare payments up to a cap. For every £8 you pay into a Tax-Free Childcare account, the government adds £2, up to a maximum top-up of £2,000 per child per year (or £4,000 for a disabled child).
The effective saving is 20% on qualifying childcare costs, capped at £10,000 of spending per child per year.
Who is eligible?
Gov.uk sets out the eligibility rules as follows:
- Both you and your partner (if you have one) must be in qualifying paid work
- Each parent must expect to earn at least the equivalent of 16 hours per week at the National Minimum Wage over the next three months
- Neither parent can have an adjusted net income (ANI) above £100,000 in the current tax year. This applies to each parent individually: if either one earns over £100,000, the household is ineligible
- You cannot claim TFC if you receive Universal Credit or are still in a legacy childcare voucher scheme
Children are eligible until 1 September after their 11th birthday (or 16th birthday if disabled).
What counts as adjusted net income?
Adjusted net income is your total taxable income minus certain deductions, including pension contributions and Gift Aid donations.
What can TFC pay for?
TFC can be used at registered childcare providers, including nurseries, childminders, after-school clubs, and holiday clubs. The provider must be registered with the relevant regulator (Ofsted in England).
It cannot be used for unregistered childcare, including nannies who are not on the Ofsted Voluntary Register.
Is TFC or a workplace nursery partnership better?
For most parents with children in full-time nursery, a workplace nursery partnership produces the larger saving. TFC is capped at £2,000 a year per child, while salary sacrifice is uncapped.
Joining a workplace nursery partnership doesn't affect your TFC eligibility. In practice, you'd use TFC for childcare the partnership doesn't cover, such as an older child's after-school club.
Enter your salary and monthly nursery bill to compare the two side by side. If your child gets funded hours, enter the bill you pay after they're deducted.
A workplace nursery partnership saves you £2,700 more a year.
Workplace nursery partnership
Saves moreTax-Free Childcare
Saves moreGood to know
- You can't use both for the same nursery fees. You can use a workplace nursery partnership for nursery fees and Tax-Free Childcare for other childcare, such as an after-school club.
- Tax-Free Childcare covers more types of childcare, including childminders and holiday clubs. A workplace nursery partnership covers registered nursery fees only.
- Funded hours work alongside either option.
- Tax-Free Childcare stops if either parent's adjusted net income is over £100,000. A workplace nursery partnership has no income limit.
This calculator gives estimates only and isn't financial or tax advice. Your actual saving will depend on your circumstances. If you're unsure which option is right for you, speak to a qualified financial adviser.
Illustrative figures using 2026/27 tax rates for England, Wales and Northern Ireland: income tax at 20%, 40% and 45%, with the personal allowance reduced above £100,000, and employee National Insurance at 8% and 2%. Scottish taxpayers will see different figures. Assumes your salary is your only income and you work full time (37.5 hours a week at the £12.71 National Living Wage).
Workplace nursery partnership savings are based on Gogeta's scheme and are shown after all costs. Savings with other providers may differ.
Tax-Free Childcare: the government adds £2 for every £8 you pay in, up to £2,000 per child per year (£4,000 for a disabled child). Both parents must be working and meet minimum earnings rules.
What are funded childcare hours?
Funded childcare hours are government-funded places at registered childcare settings, delivered free of charge to eligible parents. Since September 2025, eligible working parents can access up to 30 hours per week over 38 weeks a year, from the term after their child turns 9 months until they start school.
Current entitlements (England)
| Entitlement | Child's age | Hours per week | Eligibility |
|---|---|---|---|
| Universal entitlement | 3 and 4-year-olds | 15 hours | All children, regardless of income or employment |
| Working parent entitlement | 9 months to school age | 30 hours | Both parents working, each earning equivalent of 16 hrs/week at NMW; neither earning over £100k ANI |
| Early Learning for 2-year-olds | 2-year-olds | 15 hours | Children in receipt of certain benefits or additional support |
The universal 15 hours for 3 and 4-year-olds is available to all families with no income test. The working parent entitlement of 30 hours carries the same £100,000 adjusted net income limit as Tax-Free Childcare.
Scotland and Wales operate separate funded hours systems with different rules. Check with your local council or childcarechoices.gov.uk for the position in your area.
Can I use funded hours with a workplace nursery partnership?
You can use funded hours alongside a workplace nursery partnership for the same child. The funded hours reduce the bill, and salary sacrifice applies to the remaining fees.
For example, a higher rate taxpayer whose nursery charges £1,800/month might see the bill fall to £900/month after 30 funded hours. Salary sacrifice on the remaining £900 saves around £313 a month (£3,753 a year), on top of the funded hours themselves.
Can I still use childcare vouchers?
Childcare voucher schemes were closed to new applicants after 4 October 2018. If you didn't join a scheme before that date, this option isn't available to you.
For those still in a legacy scheme, the rules are:
- You can take up to £55 a week of your salary as tax-exempt vouchers (basic rate taxpayers); the amount is lower for higher and additional rate taxpayers who joined after April 2011
- You must stay with the same employer and they must continue to run the scheme
- You cannot take an unpaid career break of more than a year
- You cannot claim Tax-Free Childcare at the same time as childcare vouchers. If you successfully apply for TFC, you must tell your employer within 90 days and they will stop issuing new vouchers. You cannot then rejoin the voucher scheme
The practical question for most legacy voucher holders is whether to switch to Tax-Free Childcare. The government's childcare calculator can help you compare, but the right answer depends on your income, the number of children, and whether your employer now offers a workplace nursery partnership — which, for most parents paying full nursery fees, will produce a substantially larger saving than either vouchers or TFC.
What happens if I earn over £100,000?
The £100,000 adjusted net income limit applies to both Tax-Free Childcare and the working parent entitlement for funded hours. It's a hard stop, not a taper: if either parent earns over £100,000 in the current tax year, the household loses both entitlements.
Adjusted net income is not the same as your gross salary. It's calculated as your total taxable income, minus things like personal pension contributions and Gift Aid donations.
This matters, because it means your adjusted net income can be lower than your headline pay.
What support is left above £100k?
For parents whose adjusted net income genuinely exceeds £100,000 after all deductions, the picture is stark:
- No Tax-Free Childcare
- No working parent entitlement for funded hours (the universal 15 hours for 3 and 4-year-olds remains available regardless of income)
- No legacy childcare vouchers if they didn't join before October 2018
A workplace nursery partnership is the only tax-efficient childcare option available to them, and it's uncapped. Read more in our guide to the higher-earner childcare gap.
Which saves more: Tax-Free Childcare or a workplace nursery partnership?
At a glance: £1,800/month nursery bill
The figures below use a nursery bill of £1,800/month (£21,600/year), broadly representative of full-time nursery costs in London and the South East.
| Tax band | Workplace nursery saving | Tax-Free Childcare saving |
|---|---|---|
| Basic rate Based on a £50,000 annual salary |
£342/month, £4,104/year | £2,000/year (capped) |
| Higher rate Based on an £85,000 annual salary |
£625/month, £7,506/year | £2,000/year (capped) |
| Additional rate Based on a £170,000 annual salary |
£727/month, £8,721/year | Not available (income over £100k) |
Workplace nursery savings are based on Gogeta's scheme and are shown after all costs. Savings with other providers may differ.
At this bill, even a basic rate taxpayer saves around twice as much with a workplace nursery partnership as with Tax-Free Childcare.
For smaller bills of about £880 a month or less, a basic rate taxpayer will save slightly more with Tax-Free Childcare. Higher rate taxpayers save more with a workplace nursery partnership whatever the bill. Your exact saving depends on your salary, so use the calculator above to check your numbers.
Can I combine childcare benefits?
| Combination | Allowed? | Notes |
|---|---|---|
| Workplace nursery + funded hours (same child) | Yes | Salary sacrifice applies to fees after funded hours are deducted |
| Workplace nursery + Tax-Free Childcare (same nursery fees) | Not in practice | The partnership already covers those fees, so there's no bill left to pay from a childcare account |
| Workplace nursery + Tax-Free Childcare (different child or service) | Yes | e.g. salary sacrifice for nursery fees, TFC for an after-school club |
| Tax-Free Childcare + funded hours | Yes | TFC tops up fees after funded hours |
| Tax-Free Childcare + legacy childcare vouchers | No | Mutually exclusive; claiming TFC ends the voucher arrangement |
Joining a workplace nursery partnership doesn't affect your eligibility for Tax-Free Childcare. The employer schemes that rule out TFC are set out in section 12 of the Childcare Payments Act 2014: childcare vouchers and directly contracted childcare. Workplace nurseries under s.318 aren't on that list.
How do I sign up?
Tax-Free Childcare and funded hours
Both are applied for through the same government portal.
- Go to gov.uk/apply-free-childcare-if-youre-working
- Create or log in to your childcare service account
- Complete the eligibility check (takes around 20 minutes)
- If eligible for funded hours, you'll receive a code to give to your nursery
- If eligible for TFC, you'll be able to pay into your childcare account and the government top-up will be added automatically
- Reconfirm eligibility every three months to keep both entitlements active
Workplace nursery partnership via Gogeta
- Check your employer is signed up. If they're not, ask your HR team about setting up a workplace nursery partnership. Gogeta can onboard an employer in a matter of days.
- Check your nursery is in the network. Gogeta works with hundreds of registered nurseries across the UK. If your nursery isn't listed, Gogeta can onboard them.
- Apply via the Gogeta portal. Upload your nursery invoice, confirm the details, and sign the salary sacrifice agreement.
- Pay nursery fees out of gross salary. The salary sacrifice amount is deducted from your gross pay before tax and NI are calculated.
If your employer doesn't yet offer a workplace nursery partnership, this guide on how to set one up explains what's involved for HR teams.
Find out what you could save
The right combination of childcare benefits depends on your income, your child's age, your nursery fees, and what your employer offers. For most parents with children in full-time nursery, a workplace nursery partnership will produce the largest saving — and it can be used alongside funded hours to reduce fees further.
Use the Gogeta savings calculator to see what you'd save based on your salary and nursery bill.
If your employer doesn't yet offer a workplace nursery partnership, it takes a matter of days to set up and costs them nothing to run. The employer page has everything they need to get started.
