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How to get a free £2,000 a year towards your monthly childcare bills: "Too many still miss out"

ended 09. October 2025

THIS is how to get a free £2,000 a year towards your monthly childcare bills – as figures show over 500,000 families got help in June.

A total of 571,945 families received an average of £100 towards their monthly childcare bills in June 2025, new HM Revenue and Customs (HMRC) figures released today show.

They are encouraging working families to sign up to Tax-Free Childcare as Government top-ups totalled £57.7 million. Check if you're eligible here.

Paying childcare bills through a Tax-Free Childcare account can save working families up to £2,000 per year for each of their children up to the age of 11 or £4,000 per year up to the age of 16 if the child is disabled. 

Once a Tax-Free Childcare account is open, for every £8 parents deposit in their child’s account, the government tops it up by £2. 

Financial experts said many do not know they are entitled to the cash.

Philly Ponniah, Chartered Wealth Manager and Financial Coach at Philly Financial, said: "Childcare costs are one of the biggest financial pressures facing working parents, and too many still miss out on help they’re entitled to. Schemes like Tax-Free Childcare can make a real difference, and it’s good to see these numbers of families helped, but the system is confusing. 

"Many don’t realise it’s separate from the 15 or 30 funded hours, but can be claimed as well - and many after school clubs or holiday camps can be paid for using it up to the age of 11. 

"For some families, this support can mean the difference between returning to work or staying home. Until childcare is simpler, clearer and more affordable upfront, these rising costs will keep shaping parents’ choices, and the UK’s falling birth rate."

Kate Allen, Owner at Kingsbridge-based Finest Stays, said the scheme is a lifeline for parents.

She added: "As a solo parent who’s benefited from the Tax-Free Childcare scheme, I can say the impact is huge. For every £8 you pay in, the government adds £2. That's a 20% boost straight towards nursery or childcare costs. 

“I used mine to fund a local nursery and forest school while returning to running my business. Childcare costs can be crippling, yet too few families know about this support; it took me two years to discover it myself. 

"Crucially, Tax-Free Childcare is completely separate from the 30 free hours scheme, and both can be used together to make a real difference.”

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, said it can relieve pressure on families.

He added: "HMRC says claim your treats and don’t get tricked out of your childcare savings. With childcare being one of the biggest costs for working families it's important to be aware of and take advantage of schemes like Tax-Free Childcare. 

“Hopefully this will relieve some pressure on beleaguered Brit household finances and make working more financially viable for parents. This is especially important for mothers, who statistically the more likely to reduce hours or sacrifice careers due to eyewatering childcare costs.”

Ben Perks, Managing Director at Stourbridge-based Orchard Financial Advisers, said the system is broken.

He continued: “When it makes more sense not to work than pay childcare costs, something’s broken. Our economy needs workers, now more than ever, and there are swathes of parents up and down the country who don’t due to childcare costs. When costs are equal to the wage, what’s the point. 

"It’s great that there is some support in place, but more needs to be done. In addition to supporting financially, the government need to look at ways to reduce the fees charged.. Support childcare businesses more to reduce their costs and in turn this will reduce the costs they pass on to parents.”

Samuel Mather-Holgate, Independent Financial Adviser at Swindon-based Mather and Murray Financial, hailed the scheme.

He said: "This policy is probably the best that has come out of Downing Street since Starmer moved in. It could be revolutionary for getting families back to work and increasing UK productivity. 

“The numbers show that some have taken it up and are benefiting from this generous scheme. However, the awareness is still not out there and more needs to be done to show new parents what their options are around work and childcare.”

While Kundan Bhaduri, Entrepreneur and Landlord at London-based The Kushman Group, criticised it.

He added: "These subsidies are life support for a system where qualified professionals discover that going to work costs more than staying home. I have seen countless talented women in my sector abandon promising careers because nursery fees these days exceed mortgage payments, while government celebrates handing out £100 monthly top-ups as though this solves anything beyond the immediate cash flow crisis. 

“The real tragedy is watching rational families defer having children because the sums simply do not add up. When childcare costs more than most people earn after tax, this government is creating an economy that imports workers instead of raising them."

7 responses from the Newspage community

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Editor
David StirlingVerified
Independent Financial Adviser at Mint Wealth
HMRC says claim your treats and don’t get tricked out of your childcare savings. With childcare being one of the biggest costs for working families it's important to be aware of and take advantage of schemes like Tax-Free Childcare. Hopefully this will relieve some pressure on beleaguered Brit household finances and make working more financially viable for parents. This is especially important for mothers, who statistically the more likely to reduce hours or sacrifice careers due to eyewatering childcare costs.
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Editor
Ben PerksVerified
Managing Director at Orchard Financial Advisers
When it makes more sense not to work than pay childcare costs, something’s broken. Our economy needs workers, now more than ever, and there are swathes of parents up and down the country who don’t due to childcare costs.
When costs are equal to the wage, what’s the point.

It’s great that there is some support in place, but more needs to be done. In addition to supporting financially, the government need to look at ways to reduce the fees charged.. Support childcare businesses more to reduce their costs and in turn this will reduce the costs they pass on to parents.
Copy

Editor
Philly PonniahVerified
Chartered Wealth Manager and Financial Coach at Philly Financial
Childcare costs are one of the biggest financial pressures facing working parents, and too many still miss out on help they’re entitled to. Schemes like Tax-Free Childcare can make a real difference, and it’s good to see these numbers of families helped, but the system is confusing. Many don’t realise it’s separate from the 15 or 30 funded hours, but can be claimed as well - and many after school clubs or holiday camps can be paid for using it up to the age of 11. For some families, this support can mean the difference between returning to work or staying home. Until childcare is simpler, clearer and more affordable upfront, these rising costs will keep shaping parents’ choices, and the UK’s falling birth rate.
Copy

Editor
Samuel Mather-HolgateVerified
Managing Director & IFA at Mather and Murray Financial
This policy is probably the best that has come out of Downing Street since Starmer moved in. It could be revolutionary for getting families back to work and increasing UK productivity. The numbers show that some have taken it up and are benefiting from this generous scheme. However, the awareness is still not out there and more needs to be done to show new parents what their options are around work and childcare.
Copy

Editor
Kate AllenVerified
Owner at Finest Stays
As a solo parent who’s benefited from the Tax-Free Childcare scheme, I can say the impact is huge. For every £8 you pay in, the government adds £2. That's a 20% boost straight towards nursery or childcare costs. I used mine to fund a local nursery and forest school while returning to running my business. Childcare costs can be crippling, yet too few families know about this support; it took me two years to discover it myself. Crucially, Tax-Free Childcare is completely separate from the 30 free hours scheme, and both can be used together to make a real difference.
Copy

Editor
Antonia MedlicottVerified
Founder & MD at Investing Insiders
One group increasingly shut out of the government's childcare schemes are those whose earnings tip over £100,000. While it was once assumed that anyone earning over that amount could easily afford all the childcare they needed, that's simply no longer the case.

Eligibility for both free childcare hours and tax-free childcare are lost the moment one parent's income crosses that £100,000 threshold. And while wages and the price of childcare have continued to rise, the government has failed to increase the ceiling on their schemes, meaning more families than ever are finding themselves pushed out of this crucial financial help.

It's a crazy situation when people are having to turn down promotions because the pay rise would actually cost them more in lost childcare benefits than they'd gain from the rise in their wages.
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Kundan BhaduriVerified
Entrepreneur, Investor and Landlord at The Kushman Group
These subsidies are life support for a system where qualified professionals discover that going to work costs more than staying home.

I have seen countless talented women in my sector abandon promising careers because nursery fees these days exceed mortgage payments, while government celebrates handing out £100 monthly top-ups as though this solves anything beyond the immediate cash flow crisis.

The real tragedy is watching rational families defer having children because the sums simply do not add up. When childcare costs more than most people earn after tax, this government is creating an economy that imports workers instead of raising them.