MagicBooking's revolutionary HMRC Tax-Free Childcare payment integration
Written by The MagicBooking team | July 4, 2025
11 min read
At MagicBooking, we understand how crucial it is for schools, clubs and childcare providers to be able to accept all legitimate forms of payment without also having to accept huge administrative burdens, costing time and money. Similarly, parents should also be able to pay for wraparound care services using Tax-Free Childcare (TFC) in a fast, easy, and efficient manner.
That’s why we are collaborating directly with HMRC, which is responsible for managing the Tax-Free Childcare scheme, in releasing this game-changing TFC payment integration. With this collaboration, we are thrilled to be one of the first and only EdTech SaaS platforms offering seamless integration with HMRC’s TFC system - making it easier than ever for parents and childcare providers to manage payments.
Read on for a full overview of HMRC TFC and the importance of it in this sector for schools, clubs, and childcare providers, as well as parents, and how our partnership impacts them. We also cover what our new TFC integration entails, such as its characteristics, and how it addresses previous pain points.
This feature is FREE for all MagicBooking clients for an initial free period until it becomes a paid add-on, so make sure you try it out before this offer ends.
Ready to be the easiest and most accessible wraparound care option for families? Sample MagicBooking today by scheduling a free demo.
Fancy skipping the read? Get in touch for tailored advice on how we can help you.
What is Tax-Free Childcare (TFC)?
Tax-Free Childcare is a government-backed initiative designed to help working parents with the cost of childcare. Parents can set aside money for their child’s care through a salary sacrifice scheme, which is then paid directly into a TFC account. From there, they can use these funds to pay approved childcare providers, including schools, clubs, and other childcare services.
Parents can receive up to £2,000 per year for each child under the scheme, and up to £4,000 for children with disabilities. For every £8 a parent contributes to their Tax-Free Childcare account, the government adds £2, making it an invaluable support for low- and middle-income households, as well as single parents, self-employed or part-time parents.
Each child has a unique TFC code, and when parents make a payment, they select TFC as their payment method and input this code. HMRC, in partnership with the National Savings & Investments (NS&I), ensures that the funds are transferred to the childcare provider on the parent’s behalf.
Contact MagicBooking if you’d like a booking and payment system that can automate HMRC TFC payments, a new phenomenon nationwide.
How many families are using HMRC Tax-Free Childcare in the United Kingdom?
According to a UK government report from April 2024, approximately 545,000 families use Tax-Free Childcare for 664,000 children to help cover the costs of childcare. The new MagicBooking integration will dramatically reduce the frustrations associated with HMRC TFC, creating a smoother experience for both parents and providers, particularly in the face of rising costs and financial pressure.
Stay ahead of your competition. Get hold of MagicBooking’s pioneering HMRC TFC integration feature. Start by booking a free tour of the system or contacting us.
MagicBooking's role in improving the TFC experience
As a long-time partner to childcare providers, MagicBooking has always supported HMRC TFC payments, ensuring it is possible for schools and clubs to accept these payments whilst many UK systems do not.
However, MagicBooking always wanted a better way. That’s why we’ve teamed up with HMRC to create a fully integrated payment solution that addresses the struggles of childcare providers and parents.
For parents, the new integration provides greater convenience and confidence when using their Tax-Free Childcare funds.
For childcare providers, it eliminates the headaches of manual payment processing and reconciliation, allowing you to focus on what matters most: providing excellent care and service to your community. Interested in experiencing it in action? Book a demo.
Improving accessibility for all through TFC integration
HMRC Tax-Free Childcare (TFC) payments have become a vital support system for self-employed parents, part-time parents, parents returning to work, low-income households, and single-parent households.
For years, we at MagicBooking have been helping providers process TFC payments, but the integration between TFC and existing booking/payment systems created challenges for both providers and families. With TFC’s complex and separate processes, we saw firsthand how it added barriers, especially for families who were already facing accessibility issues.
Providers - whether schools, clubs, or childcare centres - have had to deal with cumbersome, time-consuming, and costly manual processes just to accept and reconcile TFC payments. These extra tasks made things harder compared to traditional credit cards or cash payments.
For parents, this often led to confusion at checkout, the need to manually ‘promise’ payments, and frustration over having to log into HMRC every time they wanted to make a payment. In many cases, parents found their accounts frozen due to overdue payments while waiting for reconciliation from HMRC.
All these challenges highlighted the accessibility issues families faced when trying to use TFC, which often made it harder for them to access affordable childcare.
Before the HMRC TFC integration, we found through our 2024 client survey that 93% of our clients felt MagicBooking had already made childcare more accessible for parents. This was a key priority for us. See our 2024 client data highlights.
Our HMRC TFC partnership marks a big shift in how childcare payments will work. For providers and parents, as everything is now automated, simplified, and instant. Come join us in the future by simply booking a free demo.
Looking for financial support to start or scale your wraparound care? Read our previous article.
The previous technical challenges with HMRC TFC payments
HMRC TFC payments through booking and payment systems nationwide have been the source of time and money spent for schools, clubs and childcare providers, and general headaches for parents.
For schools, MATs, clubs and childcare providers:
Managing TFC payments has meant dealing with multiple, often disjointed systems.
Providers - whether schools, clubs, or childcare centres - had to manually accept TFC payments, reconcile them, and verify each transaction. This was a time-consuming process that led to errors and delays.
In many cases, providers also needed to manually check if the TFC payment had been processed correctly, which created significant administrative overhead.
For parents, guardians, and families:
On the parents' side, the process of making a payment through TFC could be just as frustrating. Parents had to log in to the HMRC portal each time they wanted to make a payment, which created unnecessary steps in the process.
At checkout, they often had to manually confirm the payment, adding to the confusion. Plus, delays in the payment reconciliation process sometimes led to parents’ accounts being frozen for overdue payments, even when payments were made on time. This only added to the stress for families who were already juggling their childcare needs.
These technical barriers created an arduous experience for both parents and providers, ultimately making a system meant to support families into an additional challenge.
That's why MagicBooking has partnered with HMRC to streamline this process and eliminate these inefficiencies. With our new integration, both parents and providers can now enjoy a smoother, faster, and more reliable experience when making and receiving TFC payments.
Get a taste of the future. See the trailblazing feature in action by attending a demo.
What to expect from MagicBooking’s new HMRC TFC integration
Instant payment verification and processing at checkout
Providers: TFC payments are now instantly processed at checkout meaning providers don't have to wait for parents to activate the payments from the GOV portal. MagicBooking handles it for them.
Parents: With this new feature, parents can now make payments instantly through MagicBooking. No more logging into HMRC or waiting for manual verification. The payments are directly verified by HMRC, making the process faster and more reliable. This ensures that parents can access their benefits without delay and avoid the confusion of account freezes.
TFC payments are automatically actioned and reconciled
Providers: Childcare providers can now enjoy automated reconciliation for TFC payments. This means no more time spent manually checking balances or correcting errors. Providers can save valuable time, reduce administrative costs, and focus on delivering high-quality childcare services without the added burden of managing TFC payments.
Parents: MagicBooking handles your TFC payments, reducing your workload and eliminating the need to login to your HMRC Gov account. No payment promises, no delays, no waiting, and no false ‘overdue’ account notices!
Seamless checkout for parents
Parents: The new integration simplifies the payment process for parents. They can view their balances, validate TFC codes, and make payments in one seamless checkout experience. This streamlined system removes the barriers that previously led to frustration and delays.
Parents: Parents can now connect their HMRC TFC Gov account with MagicBooking to save them having to log in to multiple platforms!
Stay ahead of your competition. Get hold of MagicBooking’s pioneering HMRC TFC integration feature. Start by booking a free tour of the system or contacting us.
Why this feature matters for schools, clubs, and childcare providers
In the face of rising costs of living and inflation, parents are looking for ways to better afford childcare payments, and providers want to support them without sacrificing their livelihoods.
Our new HMRC TFC integration addresses these challenges directly. By automating the TFC process, we help providers save time, reduce costs, and avoid unnecessary errors so that TFC can be easily accessed.
These improvements are also a matter of urgency as Tax-Free Childcare is taking the place of the childcare voucher and directly contracted childcare programmes, which stopped accepting new applicants in October 2018.
Keep up with the future by joining MagicBooking. Start by booking a free demo or contacting us.
Will this feature remain free in the long run?
The HMRC TFC integration is currently available as a free feature for all our MagicBooking users. This gives schools, clubs, and childcare providers the chance to experience the benefits of this innovative feature without incurring additional costs.
After the initial free period, the feature will become a paid add-on, allowing us to replenish the investment we made in developing this feature and reinvest funds into maintenance.
By offering the feature for free initially, we want to give providers the time to evaluate whether the time and cost savings from reduced admin efforts justify the investment once the feature becomes paid. We are confident that the return on investment of time saved, and administrative costs cut will justify the investment for providers. For parents, this integration does not come with any additional charges.
Based on our 2024 client survey, MagicBooking helps clients save approximately 8,536 hours and over £13,341 in staff time each year. 86% of clients reported an increase in savings, with the average experiencing a 73% boost in cash flow. These savings can be reinvested into childcare services and business growth, allowing staff to focus on their core responsibilities.
With the addition of the new HMRC TFC feature, these savings are projected to grow even further. View our 2024 client data highlights.
The option to continue using the original TFC payment system will still be available at no charge, allowing users to make a fully informed decision based on their own needs.
Have questions? Go for it, we’re all ears. Leave our experts a message on our contact form.
Join MagicBooking in pioneering EdTech SaaS integration
We are proud to be one of the first and only EdTech SaaS platforms to integrate with HMRC’s TFC system. This new feature marks the beginning of a more efficient, cost-effective future for childcare providers and parents alike.
As MagicBooking leads the charge in simplifying the childcare payment process with the HMRC TFC integration, we are empowering schools, MATs, clubs, local authorities, and other childcare providers to offer a better, more accessible experience for working families.
We are your ideal partner, ensuring that your TFC parents won’t be hindered by technical issues, delayed payments, or administrative burdens.
Stay ahead of competition, be the best, and join the future by partnering with MagicBooking.
Why not schedule a cost and commitment-free demo to take a tour of our system and see the HMRC TFC feature in action? Or simply leave our experts any questions you have via our contact form.
Frequently Asked Questions (FAQs)
Who uses HMRC Tax-Free Childcare?
HMRC's Tax-Free Childcare (TFC) scheme is used by working parents and carers to help cover the costs of childcare.
Eligibility is based on meeting certain income and employment criteria. To qualify, both parents (or the single parent) must be working, with a combined income of at least £138 per week but no more than £100,000 per year. While the scheme is available to a wide range of families, it can be particularly beneficial for low-income households as it helps to ease the cost of childcare by providing government contributions to the TFC account.
However, families who receive other forms of government childcare assistance, like Universal Credit or 30 hours of free childcare, may not be eligible for TFC.
What is Tax-Free Childcare from HMRC?
Tax-Free Childcare (TFC) is a government scheme that provides financial assistance to working families to help in paying for childcare. For every £8 a parent deposits into their TFC account, the government will pay an additional £2, up to a yearly cap of £2,000 per child, or £4,000 for children with disabilities. The scheme is available for children under 12, or under 17 for children with disabilities.
Who is eligible for HMRC TFC?
To be eligible for HMRC's Tax-Free Childcare scheme, parents must be working (either as an employee or self-employed) and meet certain income requirements. The combined income of the parents must be at least £138 per week and less than £100,000 per year. Eligibility also depends on the child’s age and if they are enrolled in an approved childcare provider.
What are the types of TFC?
The main type of Tax-Free Childcare is the standard HMRC TFC scheme, where parents can deposit funds into an online account that is topped up by the government.
However, the TFC scheme is part of a wider set of government initiatives aimed at assisting working parents, such as the 30-hour free childcare scheme for 3 and 4-year-olds, but TFC itself is specifically designed to provide assistance with childcare costs.
In addition to the standard scheme, there are also private forms of TFC offered by some childcare providers. These are sometimes tailored to meet specific needs or preferences, such as:
- Employer-backed TFC schemes: Some employers may offer Tax-Free Childcare as part of their benefits package, providing easier access or additional support to working parents.
- Private childcare vouchers: While these are not technically part of TFC, some providers may offer voucher schemes that work alongside TFC or other government initiatives to provide further savings on childcare costs.
However, these earlier childcare voucher schemes are no longer accepting new applicants and are being phased out. Thus, HMRC TFC is the main ongoing scheme now.
How to apply for Tax-Free Childcare?
To apply for Tax-Free Childcare Govt scheme, parents must first set up a Government Gateway account if they don’t already have one. If they do, they must simply visit the HMRC tax free childcare login.
After signing in or creating an account, parents can apply for TFC through the official website. Once activated, you can deposit money into the account and access the government top-up. The childcare service helpline can assist with any questions related to eligibility and the process.
Have you activated your tax-free childcare account? Government Gateway: sign in or set up.
The government also provides a childcare service helpline.
How to calculate Tax-Free Childcare payment?
To calculate how much you will receive through Tax-Free Childcare, you need to know how much you’re contributing to your TFC account. For every £8 you deposit, the government adds £2, up to the annual maximum. For example, if you contribute £8, the government will add £2, and this process continues until the annual limit is reached.
You can also use the online tax-free childcare calculator on the HMRC website to help estimate how much assistance you can receive in real time.
How do I refund a Tax-Free Childcare payment?
If you need to refund a Tax-Free Childcare payment, you should contact the childcare provider directly, as they are responsible for processing refunds. HMRC does not handle refunds for TFC payments, and the provider may issue a refund through their own processes.
Is there an easier way to process Tax-Free Childcare payments?
Yes, HMRC and Magicbooking have partnered to deliver a new TFC integration which is a total game-changer for UK schools, clubs and other childcare providers using payment and booking systems, as well as parents. This pioneering TFC payment solution allows for automated and instant TFC payment processing, removing the need for manual reconciliation and reducing administrative errors, saving time for both parents and childcare providers.
Why not schedule a cost and commitment-free demo to take a tour of our system and see the HMRC TFC feature in action?
MagicBooking is the best booking and payment system and scheduling software in the UK for schools, MATs, clubs and other childcare providers. If you’d like to stay ahead of your competitors with the latest tech, reach out via our contact form.
What do I do if my Tax-Free Childcare payment is not received?
If you haven’t received your Tax-Free Childcare payment, first ensure that your account is properly set up and that the payment has been processed.
You can check your online TFC account for updates or discrepancies, including verifying the tax-free childcare payment reference to ensure the payment has been correctly linked. If the payment is still missing, you should contact the HMRC Tax-Free Childcare helpline for assistance. They will be able to help resolve any issues related to missing payments.
