Tax-Free Childcare & free hours calculator
Two schemes stack on one nursery bill: the funded free hours and the 20% Tax-Free Childcare top-up. This shows what a month of childcare really costs once both are applied.
You have reached the £2,000 a year top-up cap, so extra spending above that gets no 20% boost.
How the two schemes fit together
Childcare help in England comes from two places that most parents use at once. The funded hours cut the number of hours you are billed for, but only during the 38 term-time weeks. Tax-Free Childcare then takes 20% off whatever you still pay, which covers the extra hours, plus meals and top-up charges that free hours do not cover. This tool applies the free hours first, then the top-up on the remainder, because that is the order the money actually works in.
The top-up has a ceiling. The government adds at most £2,000 a child each year, rising to £4,000 if the child is disabled. Once you have received that, further spending gets no boost, so very large bills see a smaller percentage of help overall.
Worked example
Take 40 hours a week at £7 an hour with the full 30 free hours. Over the year you use 2,080 paid hours, and the free hours cover 1,140 of them, leaving 940 chargeable hours worth £6,580. The 20% top-up on that is £1,316, well under the £2,000 cap. Your own share is £5,264 a year, about £439 a month, against a headline bill of £1,213. In the holidays the free hours stop, so those weeks cost more unless your nursery stretches the entitlement across the year.
Common questions
How does the 20% Tax-Free Childcare top-up work?
For every £8 you pay into your childcare account the government adds £2, which is a 20% top-up on what you spend. The most it will add is £2,000 a child each year, or £4,000 if the child is disabled. To get the full £2,000 you would pay in £8,000 across the year.
Can I use Tax-Free Childcare and the free hours together?
Yes. The free hours cover part of the nursery week, and Tax-Free Childcare gives you 20% off whatever you still pay for the extra hours, meals or top-up fees. This tool applies the free hours first, then the 20% top-up on the remainder.
Why is my nursery bill higher in the school holidays?
Funded free hours are term-time only, which is 38 weeks a year. Some nurseries let you stretch the same total hours across all 52 weeks at fewer hours a week. If you use full-time care all year, the holiday weeks have no free hours and cost more.
When can my child get 30 free hours?
From September 2025 the expanded entitlement reaches children from 9 months old, as long as the eligibility rules on earnings are met. Younger babies and higher earners may get fewer hours or none, so check your entitlement on gov.uk before you rely on it.
Does Tax-Free Childcare affect Universal Credit?
You cannot claim Tax-Free Childcare and the Universal Credit childcare element at the same time. Universal Credit can refund a larger share for lower earners, so it is worth comparing both rather than assuming the top-up is best.