Childcare Support for NHS Staff: Tax-Free Childcare and Free Hours

Childcare is one of the biggest costs for working parents, and NHS shift patterns make it harder still. Two government schemes can help a lot: Tax-Free Childcare and funded childcare hours. This guide explains both for NHS staff in England, and a detail about NHS pension contributions that can make the difference for higher earners.

Tax-Free Childcare

With Tax-Free Childcare, you open an online childcare account, pay money in, and the government adds £2 for every £8 you pay. That is a 20% top-up.

• The top-up is up to £500 every three months for each child, which is £2,000 a year.
• For a disabled child, it is up to £1,000 every three months, which is £4,000 a year.
• You can use it for children up to the age of 11, or 16 if disabled.
• The provider must be registered, such as a nursery, childminder, nanny, after-school club or holiday club.

Funded childcare hours

In England, working parents can get funded childcare hours:

• 30 hours a week in term time for eligible working parents of children from 9 months old until they start school
• 15 hours a week for all 3 and 4 year olds, regardless of work

You can use funded hours and Tax-Free Childcare together. Many families use the funded hours for the core of their childcare and Tax-Free Childcare for the rest.

Who qualifies?

For both schemes, broadly, you and your partner if you have one must:

• each expect to earn at least the equivalent of 16 hours a week at the National Minimum Wage or National Living Wage over the next three months
• each have adjusted net income of no more than £100,000 a year

You cannot get Tax-Free Childcare at the same time as childcare vouchers or the childcare element of Universal Credit.

The £100,000 limit and your NHS Pension

This is where many senior NHS staff get it wrong. The limit is based on adjusted net income, not salary. NHS Pension contributions are taken before tax, so they reduce your adjusted net income.

So a parent earning £108,814 or even £112,782 in basic NHS salary may still be under the limit, as long as nothing else pushes their income up. Overtime, bank work, private income, rental income and some benefits all count. Salary sacrifice schemes also reduce adjusted net income.

Being even £1 over the limit means losing all of the support, which could be worth many thousands of pounds a year. If you are close, check your figures carefully and reconfirm every three months, as the schemes require.

Childcare vouchers

Employer childcare voucher schemes closed to new joiners in October 2018. If you already use them and stay with the same employer, you can usually continue. Compare them with Tax-Free Childcare before switching, because you cannot use both, and once you leave vouchers you cannot go back.

Fitting childcare around NHS shifts

Long days, nights and weekends do not fit easily with nursery opening hours. Things NHS parents often use include:

• Childminders, who may offer earlier starts and later finishes
• Nannies, including nanny shares, which can be paid through Tax-Free Childcare if the nanny is registered
• Self-rostering or fixed shifts, requested through flexible working. See our flexible working guide.
• Workplace nurseries, which some NHS trusts offer, sometimes through salary sacrifice

Common questions

Do I need to reconfirm my eligibility? Yes, every three months, through your childcare account.

Does my partner's income count? Each parent must meet the conditions separately.

Does maternity leave affect eligibility? You may still qualify while on maternity leave in some cases, especially if you are returning to work soon. Check the GOV.UK rules.

See how deductions add up

The salary sacrifice calculator shows how schemes affect your take-home pay, and the take-home pay calculator shows your monthly figure.