UK Childcare Cost & Tax-Free Childcare Calculator 2026/27
Working out the real cost of childcare after subsidies.
Estimate your real UK childcare cost after Tax-Free Childcare and free-hours support. Model nursery fees, wraparound care, term-time assumptions, and real out-of-pocket costs for working families.
United Kingdom Childcare Cost Notes
UK childcare costs often depend on whether you qualify for Tax-Free Childcare, funded free hours, or employer-supported flexibility, plus how many weeks of the year you actually need paid care.
This version is tuned to UK family budgeting, where nursery fees, school-holiday cover, and wraparound care can change the real annual cost a lot.
UK-specific treatment for childcare cost: figures are framed in pounds, with British household or business wording and the assumptions commonly seen in PAYE, HMRC, mortgage, pension, and consumer-credit contexts.
Watch for UK markers in the page copy and inputs: HMRC, PAYE, National Insurance, pension contributions, stamp duty land tax, miles, APR, part-exchange, council tax, VAT, and GBP-based totals.
The result should be read as a United Kingdom estimate, so compare it with UK provider quotes, HMRC or GOV.UK guidance, lender affordability rules, devolved-nation differences, or regulated advice where needed.
⚠️ Estimates only. Tax-Free Childcare and funded-hours rules are set by the government and can change. Always verify at gov.uk (Childcare Choices).
How UK childcare support works in 2026/27
A full-time UK nursery place runs about £13,000–£16,000 a year (more in London). Three schemes cut the real cost for working parents: the funded free hours, Tax-Free Childcare, and — for those on Universal Credit — the childcare element. This calculator combines the first two.
Funded free hours
Every 3–4 year old gets 15 free hours a week (570 hours a year). Working parents of children aged 9 months to school age get 30 hours (1,140 hours a year, spread over 38 term weeks), fully rolled out from September 2025. Funded hours are delivered by your provider — you still pay for any hours beyond them, plus meals and extras.
Tax-Free Childcare (the 20% top-up)
For every £8 you pay into an online childcare account, the government adds £2 — a 20% top-up, capped at £2,000 per child per year (£4,000 if the child is disabled). You use it to pay any registered provider. It's separate from, and can be combined with, the funded hours.
The £100,000 cliff edge
Both Tax-Free Childcare and the 30 funded hours require each parent to be working (earning at least the equivalent of 16 hours a week at the National Living Wage) and neither parent to have adjusted net income above £100,000. Go £1 over £100k and you lose both — pension contributions and salary sacrifice can bring you back under.
Universal Credit alternative
Families on Universal Credit can instead claim the childcare element — up to 85% of costs, capped at £1,071.09/month for one child or £1,836.16 for two (2026/27). You cannot use it at the same time as Tax-Free Childcare, so compare the two.
Typical UK childcare costs by type and location
Typical costs by type and area (2026/27)
| Care type | Typical weekly (full-time) | London premium |
|---|---|---|
| Nursery — under 2 (London) | £320-420 | 30-50% |
| Nursery — under 2 (rest of UK) | £240-300 | — |
| Nursery — 2-4 years | £220-290 | 25-40% |
| Childminder | £200-280 | 20-35% |
| After-school club | £60-90 | 20% |
| Holiday club | £130-220/week | 15-30% |
What the support is worth
Tax-Free Childcare is capped at £2,000/child a year, so on a £13,000 nursery bill it covers up to £2,000 (about 15% of the total once you are past the cap). The funded hours are usually the bigger saving: 30 hours a week over 38 weeks can be worth £4,000–£6,000 a year for a 3–4 year old.
Worked example (working couple, one 3-year-old)
£55/day × 5 days × 51 weeks = £14,025 gross. Deduct 30 funded hours (1,140 hrs × ~£5.50/hr ≈ £6,270), leaving £7,755 to pay. Tax-Free Childcare adds 20% of that up to the £2,000 cap = £1,551. Net cost ≈ £6,204/year — under half the sticker price.
Tax-Free Childcare rules and limits 2026/27
Key figures
| Item | 2026/27 |
|---|---|
| Top-up rate | 20% (£2 added per £8 paid) |
| Cap per child | £2,000/year (£4,000 if disabled) |
| Income limit (per parent) | £100,000 adjusted net income |
| Minimum earnings (each parent) | ~16 hrs/week at National Living Wage |
| Child age | Under 12 (under 17 if disabled) |
| Funded free hours | 15 universal (3–4); 30 for working parents (9 months+) |
The £100,000 cliff edge
Eligibility is assessed per parent, not on combined income — but if either parent's adjusted net income tops £100,000, the household loses Tax-Free Childcare and the 30 funded hours entirely. Because pension contributions and salary sacrifice reduce adjusted net income, a parent earning, say, £105,000 can restore eligibility by paying £5,000+ into a pension.
What you can't combine
You can use funded hours and Tax-Free Childcare together, but Tax-Free Childcare cannot be used at the same time as Universal Credit, working tax credit, or the old employer childcare vouchers. Compare Tax-Free Childcare against the Universal Credit childcare element (85% of costs, capped) and pick one.
How to claim
Open a childcare account on GOV.UK (search "Childcare Choices"). Reconfirm your details every 3 months. The 20% top-up is added when you pay money in, and you pay your provider from the account. Apply for the funded hours through the same service to get a code for your provider.
FAQFrequently asked questions about UK childcare costs
How much does childcare cost in the UK in 2026/27?
A full-time nursery place averages £13,000–£16,000 a year (higher in London), or £60–£90 a day; a childminder is often a little less. The 15/30 funded free hours and Tax-Free Childcare's 20% top-up bring the net cost down substantially for working parents.
What is Tax-Free Childcare in 2026/27?
A 20% government top-up: for every £8 you pay into an online childcare account, the government adds £2, up to £2,000 per child per year (£4,000 if disabled). Both parents must work and neither can have adjusted net income over £100,000.
How do the funded free hours work?
All 3–4 year olds get 15 free hours a week; working parents of children aged 9 months to school age get 30 hours (1,140 hours a year over 38 term weeks), fully available since September 2025. You can use funded hours and Tax-Free Childcare together.
What happens if I earn over £100,000?
If either parent's adjusted net income tops £100,000, you lose both Tax-Free Childcare and the 30 funded hours — a cliff edge worth thousands. Pension contributions and salary sacrifice reduce adjusted net income and can keep you under it.
Can I claim childcare as a tax deduction?
No — there is no income-tax deduction for childcare in the UK. Support comes as Tax-Free Childcare, the funded free hours, and (for those on Universal Credit) the childcare element, which refunds up to 85% of costs.
Tax-Free Childcare or Universal Credit — which is better?
The Universal Credit childcare element pays up to 85% (capped at £1,071.09/month for one child, £1,836.16 for two in 2026/27) but only if you're on UC. Tax-Free Childcare gives 20% to anyone eligible. Lower-income families on UC usually gain more — and you can't use both at once.
Where these figures come from
Income figures on this page are drawn from the HMRC, the GOV.UK (minimum wage and awards), and the Office for National Statistics (national earnings).
- PAYE withholding & income tax rates — HMRC — Individual income tax rates.
- pension Guarantee rate — HMRC — employer pension contribution percentage.
- National minimum wage — GOV.UK — Minimum wages.
- Average weekly earnings — the ONS — Average Weekly Earnings.
- National Insurance — HMRC — National Insurance.
Last checked: April 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
Select the question that matches where you are right now.
Your net cost is what you pay after the funded free hours and the 20% Tax-Free Childcare top-up. The chart (Standard mode) shows how net cost jumps the moment a parent's income crosses £100,000 — the cliff edge.
Tax-Free Childcare is capped at £2,000 per child, so on a £14,000 bill it covers about 14% once you pass the cap. The 30 funded hours are typically the bigger saving — worth £4,000–£6,000 a year for a 3–4 year old — because they are hours of care, not a capped cash amount.
Switch to Standard mode to see the support you receive by income. It is flat up to £100,000 and drops to zero the instant a parent goes over — losing both Tax-Free Childcare and the 30 funded hours. Your position sits on the line as a blue dot, so you can see how close you are to the edge.
This calculator uses published 2026/27 figures for planning. Your actual support depends on your provider's hourly rate, how your funded hours are delivered (term-time vs stretched), and each parent's adjusted net income. Confirm your eligibility and open an account at GOV.UK — Childcare Choices.
Funded hours and Tax-Free Childcare stack together. Here is how they combine on a typical bill.
First, deduct your funded free hours from the bill: 15 hours a week for a 3–4 year old, or 30 hours for a working family (9 months to school age), over 38 term weeks. If your child does more hours than that, or you pay for meals and nappies, you still pay for the extra.
On whatever you pay for the remaining hours, Tax-Free Childcare adds 20% (£2 per £8), up to £2,000 per child per year. Pay from your online childcare account and the top-up is added automatically. Providers must be signed up to the scheme — most nurseries and childminders are.
Working couple, one 3-year-old, £55/day × 5 days × 51 weeks = £14,025. Deduct 30 funded hours (1,140 hrs × ~£5.50 ≈ £6,270), leaving £7,755 to pay. Tax-Free Childcare adds 20% of that = £1,551 (under the £2,000 cap). Net cost ≈ £6,204/year — about 44% of the sticker price. A higher-earning couple over £100,000 would get neither, paying the full £14,025.
Beyond choosing a cheaper provider, there are several strategies that can significantly reduce your net childcare cost.
Adjusted net income is after pension contributions, so a parent earning £105,000 can pay £5,000+ into a pension (via salary sacrifice or a personal contribution) to get back under £100,000 — restoring both Tax-Free Childcare and the 30 funded hours, on top of the pension tax relief. Near £100k this is often worth thousands.
If you're on Universal Credit, its childcare element pays up to 85% of costs (capped at £1,071.09/month for one child, £1,836.16 for two) — usually far more than the 20% top-up, but you can't use both. Use a benefits calculator to see which leaves you better off before you open a Tax-Free Childcare account.
Make sure you claim all the funded hours you're entitled to — apply for a code on GOV.UK and give it to your provider. Then compare providers: a childminder or a nursery that offers stretched funding (fewer hours over more weeks) can cut what you pay for the non-funded portion, which is where Tax-Free Childcare then adds its 20%.
Returning to work raises the question: does the extra income beat the childcare cost? With funded hours and the 20% top-up, it usually does.
Compare your take-home pay from working against your net childcare cost after funded hours and Tax-Free Childcare. With 30 funded hours and the 20% top-up, net nursery cost for a 3–4 year old is often £5,000–£7,000 a year — usually well below a part-time salary. Even near break-even, working preserves career progression and pension contributions.
You can apply for Tax-Free Childcare and the funded hours up to a few weeks before you start work, based on expected earnings. Funded hours begin the term after your child reaches the qualifying age and you have a valid code, so apply early — codes must be issued before the term starts (by 31 August, 31 December, or 31 March).
One often-missed factor: childcare years reduce pension accumulation for the lower-earning partner (typically the mother). During paid statutory maternity or shared parental leave your employer must keep paying pension contributions, but unpaid leave and career breaks still mean less pension growth. Working part-time and keeping up pension contributions — even at a cost close to break-even on a take-home basis — has significant long-term value. Use the pension calculator to model the long-term difference between working part-time and staying home for 3–5 years.