Tax-Free Childcare provides working parents with 20% support on childcare costs up to £10,000. Eligible working families with children under 12 (or under 17 if disabled) will receive up to £2,000 per child per year (or £4,000 per child per year for disabled children) towards their childcare bills.
While there was been a decrease in the use of TFC at the start of the pandemic, usage rapidly climbed back to pre-Covid levels. 227,000 families used Tax-Free Childcare for 263,000 children in September 2020 (https://www.gov.uk/government/statistics/tax-free-childcare-statistics-september-2020), this compares with 172,000 families using childcare for 205,000 children in September 2019 (https://www.gov.uk/government/statistics/tax-free-childcare-statistics-september-2019). The government spent £26.5m on top-up for families in September 2020, compared to £19.0m in September 2019.
In addition, Tax-Free Childcare is fairer than its predecessor, Employer Supported Childcare (including Childcare Vouchers). Tax-Free Childcare broadens access to childcare support for more working families, including parents whose employer doesn’t offer vouchers and the self-employed who can’t use vouchers. TFC also provides support per child rather than per parent, meaning lone parent households get the same support as those with more than one parent.