Tax-Free Childcare on £20,000 Childcare — £30,000 Salary
England, Wales & Scotland · 2025-26 · Government top-up: £2,000/year
Tax-Free Childcare breakdown — 2025-26
| Item | Per year | Per month |
|---|---|---|
| Total childcare cost | £20,000 | £1,667 |
| Government top-up (25%) | £2,000 | £167 |
| You pay (parent contribution) | £18,000 | £1,500 |
Am I eligible on a £30,000 salary?
- Both parents must be working (or you are a single working parent)
- Each parent must earn at least £2,167/quarter (equivalent to National Living Wage for 16 hrs/week)
- Neither parent can earn over £100,000/year — £30,000 is within the limit
- Child must be under 11 years old (or under 17 if disabled)
- Your childcare provider must be registered with Ofsted (or equivalent)
Personalised Tax-Free Childcare insights
On £20,000 of annual childcare, Tax-Free Childcare covers 10.0% via the £2,000 government top-up. You are already receiving the maximum £2,000/year TFC top-up — any additional childcare spend beyond £8,000 is not eligible for further government support under this scheme (TFC caps at £2,000/child/year). If your child is aged 3 or 4 in England, the 30 hours free childcare entitlement (worth around £9,690/year at typical nursery rates) stacks on top of TFC — leaving you paying for roughly £10,310 of residual costs, on which TFC would add another £2,000. Combined, that is up to £11,690/year of government support for working parents.
Tax-Free Childcare on £30,000: how much do you save?
On a £30,000 salary, Tax-Free Childcare gives you a government top-up of £2,000/year on your £20,000 childcare costs. Instead of paying £20,000 outright, you deposit £18,000 into your TFC account and the government adds £2,000 — bringing the total to £20,000.
Your monthly childcare cost drops from £1,667 to £1,500 — a genuine reduction in your household spending without any change to your take-home salary.
30 hours free childcare vs Tax-Free Childcare at £30,000
The 30 hours free childcare entitlement (available for 3 and 4 year olds in England, subject to working parent criteria) and Tax-Free Childcare are separate schemes that can be used together. 30 free hours term-time equates to roughly £9,690/year at typical nursery benchmarks. Against your £20,000 total spend, that leaves around £10,310 of residual childcare cost — on which TFC would add a further £2,000 in top-up. Stacked together, the two schemes deliver up to £11,690/year of support on £20,000 of childcare. You are already receiving the maximum £2,000/year TFC top-up — any additional childcare spend beyond £8,000 is not eligible for further government support under this scheme (TFC caps at £2,000/child/year).
Tax-Free Childcare vs salary sacrifice childcare vouchers
If you are currently on an employer childcare voucher scheme (salary sacrifice), you cannot use both schemes simultaneously. Voucher schemes closed to new entrants in October 2018. If you joined before then, compare your annual saving under each scheme before switching — Tax-Free Childcare is generally better for lower earners or those with higher childcare costs.
Frequently asked questions
How much tax-free childcare do I get on £20,000 childcare costs?
With annual childcare costs of £20,000, the government tops up your Tax-Free Childcare account by £2,000/year. You deposit £18,000 and the government adds £2,000, giving a total of £20,000 to pay your provider. Your childcare cost of £20,000 reaches or exceeds the £8,000 threshold, so you receive the maximum government top-up of £2,000.
How much do I actually pay per month for £20,000 childcare with tax-free childcare?
Without Tax-Free Childcare, £20,000/year costs £1,667/month. With the government top-up of £2,000, your actual annual cost drops to £18,000 — that is £1,500/month. This saving applies regardless of your salary (as long as both parents work and neither earns over £100,000).
Can I use tax-free childcare on a £30,000 salary?
Yes — on a £30,000 salary you are well within the £100,000 income limit for Tax-Free Childcare. Both parents must be working and each must earn at least £2,167/quarter in 2025-26. Self-employed parents on £30,000 also qualify.
Can I use Tax-Free Childcare alongside 30 hours free childcare?
Yes — Tax-Free Childcare and the 30 hours free childcare entitlement are separate schemes and can be used together. The 30 free hours (for 3 and 4 year olds in England) cover a portion of your childcare provider's costs, and you can pay any remaining balance through your Tax-Free Childcare account to receive the 25% government top-up on what you contribute. On £30,000 you remain below the £100,000 limit, so you qualify for both.
How do I open a Tax-Free Childcare account?
Apply through the government's Childcare Service at childcare.gov.uk. You will need a Government Gateway account. HMRC checks your eligibility (income, employment status, child's age) and, if approved, opens a Childcare Service account. You can then add money at any time, and the government tops it up within 24 hours. Your provider must be registered with Ofsted (England), Care Inspectorate (Scotland), or CIW (Wales) to accept payments. On your £30,000 salary, the top-up on £20,000 childcare costs is £2,000/year.