25 November 2025
Cross-party MPs are urging the UK Government to increase the Tax-Free Childcare allowance cap in line with inflation, warning that years of rising childcare costs have severely eroded the value of support available to families.
The average full-time prices for daycare settings are close to £16,000/year, a cost that has increased at an average rate of 12% annually.
Under the current scheme, eligible parents can receive up to £500 every three months, capped at £2,000 per year (or £4,000 for a child with a disability). This cap has remained unchanged since the scheme was launched in 2017, despite childcare prices rising by around 34% in the same period. As a result, the real value of support has fallen significantly over the past eight years.
The renewed call comes ahead of this year’s Autumn Budget and is being led by SDLP Leader Claire Hanna MP, who has previously written to the Chancellor on the issue.
The move has gained support from MPs across England, Northern Ireland, Scotland and Wales, including members of Labour, SNP, Plaid Cymru, the SDLP, the Green Party, Alliance and the Liberal Democrats.
In their letter, MPs urge the Chancellor to bring Tax-Free Childcare in line with other forms of support, such as tax credits and pensions, which are uprated annually to reflect inflation.
SDLP Leader Claire Hanna MP said:
“Northern Ireland is the only part of the UK without a dedicated Childcare Strategy, so families here rely even more on the support that Tax-Free Childcare provides, especially those using full-time childcare who regularly exceed the cap.
“The Chancellor previously told me in correspondence that the current cap ‘strikes the right balance’ between supporting parents and managing public finances. But it is clear that the balance has shifted. Tax-Free Childcare is worth far less in 2025 than it was in 2017. Updating it is not only fair, but necessary.”
Rachel Grocott, CEO of Pregnant Then Screwed, said:
“Parents are losing hundreds of pounds every year because the government has completely blanked this scheme since launch. Tax-Free Childcare was meant to be a lifeline, but its value has been eroded as childcare costs have soared. Families are being squeezed from every angle, rising bills, rising prices, and stagnant support. Other benefits are uprated annually, so there is no justification for penalising parents. If the cap stays frozen, this lifeline will keep shrinking until it becomes meaningless, and once again parents will be the ones picking up the pieces.
“This is a modest but meaningful ask. Along with colleagues from across parties and regions, I’m urging the Chancellor to act to help families who are already stretched to breaking point. It’s time this long-frozen cap was brought into the real world."
Raissa Balduino, Deputy Director of Melted Parents, said:
"We are delighted to sign this letter alongside Pregnant Then Screwed. Increasing the TFC cap is something we've advocated for since the start of our campaign and it's great to see it getting a nationwide push. Families across the UK desperately need this support to make childcare more affordable, especially in Northern Ireland where there's no Childcare Strategy in place and childcare costs are increasing at an average rate of 12% per year.”