What counts as qualifying childcare?
Tax-Free Childcare can only be spent on approved childcare. The test is about the provider, not about the activity: the same after-school club counts if it is registered, and does not count if it is not. Before you apply, check with your provider that they are signed up to the scheme. If they are not, you can invite them to join from inside your childcare account — but do not assume they will, and do not pay them from the account until they are linked.
Approved providers
Your provider must be one of the following: a registered childminder, nanny, playscheme, nursery, or club; a childminder or nanny with a registered childminder agency or childcare agency; a registered school; or a home care worker working for a registered home care agency. In practice, that covers the childcare most working parents use: nurseries and pre-schools, childminders, nannies, breakfast clubs, after-school clubs, holiday clubs, and playschemes. Registration is checked by the relevant regulator — Ofsted in England, the Care Inspectorate in Scotland and Wales, and the equivalent body in Northern Ireland — and your provider's registration is what makes them "approved" for the scheme.
What you can pay for
You can use the account to pay for childminders, nurseries, and nannies, and for after-school clubs, breakfast clubs, and holiday clubs. You can also pay for extras supplied by your childcare provider, such as nappies, meals, and trips. That last point matters more than it looks: funded childcare hours cover the childcare itself, not everything around it, and Tax-Free Childcare can pick up exactly those extras. If your provider charges separately for meals or trips, those charges can go through the account, provided they are supplied by the provider as part of the childcare.
Disabled children: extra help
If your child is disabled, the top-up doubles to £1,000 every three months, and the extra money can be used in two additional ways. First, it can pay for more hours of childcare than a non-disabled child would need. Second, it can help pay your childcare provider so they can buy specialist equipment for your child, such as mobility aids. Talk to your provider about what equipment might be available and how it would be funded: the provider buys the equipment, and the account pays towards it, rather than you buying equipment directly.
Providers outside the UK
You may be able to use Tax-Free Childcare to pay a provider based in a European Economic Area country. This is not automatic, and you should contact HMRC to check before you commit to the arrangement. Frontier workers and families with cross-border arrangements should check the position for their specific country, because registration rules differ across the EEA.
What does not count
Informal care does not count, however much you pay for it. A grandparent, friend, or neighbour who looks after your child but is not a registered provider cannot be paid from the account, even if you pay them regularly. The same applies to an unregistered babysitter. If the person caring for your child is a registered childminder or nanny, they count; if they are not registered, they do not, however good the care is. If you are unsure whether a provider is registered, ask them for their registration details, or check through the account's provider search before you pay.
Sources: GOV.UK, Tax-Free Childcare (what you can use it for, approved childcare, and disabled children); Best Start in Life, How Tax-Free Childcare works.