Tax-free childcare vs 30 hours funding
Compare both government schemes to understand which offers better value for your family and how to use them together.
The UK government offers two main childcare support schemes: 30 hours funded childcare and tax-free childcare. Understanding the differences and how to use them together can save you hundreds of pounds each month.
Quick comparison
| Feature | 30 Hours Funding | Tax-Free Childcare |
|---|---|---|
| What you get | Up to 30 hours free childcare per week | 20% contribution on childcare costs |
| Maximum benefit | £5,000+ per year | £2,000 per year (£4,000 for disabled children) |
| Age range | 3-4 years (some 2-year-olds) | 0-11 years (0-17 for disabled children) |
| Provider restrictions | Registered providers offering funded places | Any registered childcare provider |
| Can be combined | Yes - use for funded hours | Yes - use for additional costs |
30 hours funded childcare
The 30 hours scheme provides free childcare for working parents. It\'s usually the more valuable scheme if you qualify, potentially saving thousands of pounds per year.
Advantages
- Completely free - no upfront costs
- High value - can save £5,000+ per year
- Covers core childcare hours
- Available for term-time or stretched over the year
Disadvantages
- Limited to 3-4 year olds (mostly)
- Must reconfirm eligibility every 3 months
- Not all providers offer funded places
- May not cover meals, extras, or additional hours
Tax-free childcare
Tax-free childcare works like a savings account where the government adds 20p for every 80p you pay in, up to £2,000 per year per child.
Advantages
- Works with any registered provider
- Covers children from birth to 11 (or 17 if disabled)
- Can be used for any childcare costs
- Flexible - pay in when you need it
Disadvantages
- Requires upfront payment from you
- Lower maximum benefit than 30 hours
- Can\'t be used with childcare vouchers or Universal Credit
- Must reconfirm eligibility every 3 months
Using both schemes together
The good news is you can use both schemes together for maximum savings. Here\'s how:
Best of both worlds
Example scenario
Sarah has a 3-year-old and needs 40 hours of childcare per week at £6 per hour:
- Without any support: £240 per week (£12,480 per year)
- With 30 hours funding: £60 per week for 10 extra hours (£3,120 per year)
- With tax-free childcare on extra hours: £48 per week (£2,496 per year)
- Total saving: £9,984 per year
Which should you choose?
If you can only choose one scheme, here\'s our recommendation:
Choose 30 hours funding if:
- • Your child is 3-4 years old
- • You need regular, consistent childcare
- • You can find a provider offering funded places
- • You need more than 25 hours per week
Choose tax-free childcare if:
- • Your child is under 3 or over 4
- • You need flexible, occasional childcare
- • You want to use any provider
- • You need less than 25 hours per week
Application tips
Both schemes have similar eligibility requirements, but there are some key differences to be aware of:
Income limits
- Both schemes: Earn at least £152 per week
- Both schemes: Earn less than £100,000 per year
- Tax-free childcare: Can\'t claim Universal Credit childcare element
Reconfirmation timing
Both schemes require reconfirmation every 3 months, but the dates might be different. Set separate reminders for each scheme to avoid missing deadlines.
Common mistakes to avoid
- Not applying for both: Many families miss out on thousands in savings by only using one scheme
- Forgetting to reconfirm: Missing reconfirmation deadlines means losing benefits immediately
- Not checking provider participation: Ensure your provider accepts funded hours before applying
- Miscalculating savings: Use our savings calculator to see real costs
Was this guide helpful?
Frequently asked questions
Disclaimer: This guide provides general information only. Always check the latest official government guidance and speak to your childcare provider for the most up-to-date information specific to your situation.
Official government resources: