Limited Company contracting with children – are you entitled to childcare?

By Published On: 26 January 2022

There are so many great positives to choosing a career in contracting, one of which is the flexibility it can provide if you have a family. You choose when, where and how you work, and can adapt it to fit around your parental responsibilities.

So as a Limited Company contractor are you entitled to childcare aid from the government? In this blog we explore just that, and show you what help is available.

The cost of childcare

Childcare in the UK doesn’t come cheap, and when you have more than one child to account for the costs can soon add up. Even before having your first child the thought of juggling work and childcare along with the associated costs will more than likely cross your mind, and you’ll no doubt have weighed up the number of hours you work versus the cost of those hours in childcare.

So what help is available, and which option is right for you?

Childcare vouchers

Unfortunately childcare vouchers are not available to the self-employed. They’re also only available to those who have been using them in permanent employment prior to October 4th 2018. For more information on childcare vouchers, take a look at the website.

Aid for the self-employed

The following schemes are available to both the self-employed and employees:

  1. Tax-Free Childcare Scheme

A government initiative which for every 80p you personally pay into your account, the government will add an extra 20p in also, thus effectively ‘topping up’ your childcare fund. If you’re eligible, you’re able to claim a total of up to £2,000 per child per year, up to the age of 11. You’re able to claim a total of £10,000 in any given year, and up to £500 per quarter, per child.

  1. The Tax-Free Childcare Scheme – if your child is disabled

Parents of disabled children are able to claim £4,000 per child per year, up to the age of 17. Your child must already receive either the Disability Living Allowance (DLA), the Personal Independence Payment (PIP), or the Armed Forces Independent Payment (AFIP), and / or be registered severely sight impaired / fully blind to be eligible.

Who’s eligible to use the Tax-Free Childcare Scheme?

It’s available to both the self-employed and those who are in permanent employment. Traditionally you’ll need to be earning a minimum of £120 per week to be eligible for the scheme, but if you’re new to contracting and not quite earning that amount right away, this limit is waived for the first 12 months of you contracting. To qualify you’ll need to do the following:

  • Be in work and / or on parental, sick or annual leave
  • Have a child or children aged younger than 11
  • Have a child or children who live with you for the majority of the time
  • Be earning the minimum wage for at least 16 hours per week

Keeping in touch with

You must reconfirm your personal details and circumstances every three months, to continue receiving your tax-free childcare. If you miss the deadline for reconfirming your details, you’ll be expected to pay for any gaps in outstanding childcare payments, so make sure you stay on top of it!

Can others pay into your childcare account?

Yes! If you have generous grandparents or others who wish to contribute, they’re able to pay into your child’s account. Whilst the account itself can only be opened by one person and kept in their name, any number of people can pay money into it by simply making a transfer via a standing order or a bank transfer.

How it works

The government’s contribution should appear shortly after or later on in the same day that a payment is made.

How do you apply?

Create your account here using the online form from If you haven’t yet done so you’ll need to create a gateway account first, as you’ll need your gateway ID to apply for tax-free childcare online. To be eligible you’ll need:

  • Your UK passport
  • Tax credit information
  • Your P60 or a recent payslip (if you have one)
  • Your National Insurance number
  • Your unique taxpayer reference (UTR) number

Can you claim if you’re already claiming financial support?

Not if you’re already receiving Working Tax Credit, Child Tax Credit, or Universal Credit. If you decide to claim for the tax-free childcare and your application is accepted, any other payments will be stopped, so it’s worth taking a look to see which will hold the greatest financial value before applying. The website has a tool which is designed to help you see which option is the right one for you, based on your personal circumstances.

30 free hours for three and four year olds

As well as the tax-free childcare, you’re also entitled to claim 30 hours free childcare for 38 term-time weeks per year, for any child aged three or four. To apply you follow the same steps previously mentioned, and select the 30 hours free option.

Do note that if your or your partner’s annual income exceeds £100,000, you won’t be eligible for the 30 free hours.

How Aardvark Accounting can help

Our team of expert accountants here at Aardvark know their clients inside and out, including their business needs as well as their personal needs. So if there’s a way we’re able to help you save money, then we’ll advise you on how to go about doing so. Whether it’s financial guidance, pension advice, or helping you plan for your future, we’re here to support and guide you. Get in touch today to find out more about how we can help you.

Note: All the information and advice in this blog post was correct at the time of writing.

Share This Article, Choose Your Platform!

Just starting out?

  • Complete business set-up at no extra charge

  • Bespoke tax and IR35 advice

  • FreeAgent accounting software

Switching Accountant?

  • Switching is quick and easy

  • Quick and responsive personal service
  • Pro-active tax review and advice on improvements