Getting Help With Childcare Costs
10th August 2017
Life as a young parent is never easy, whether you're in work or still studying. For many people, the cost of childcare can be a serious stumbling block. Worse still, so many parents - literally hundreds of thousands of them – are missing out on thousands of pounds in help from the government.
There's a wide range of different kinds of support out there, from childcare vouchers to tax credits. You do need to know how to get what you're entitled to, though – and that's what trips up so many people.
Here are the answers you need to know:
What kind of childcare qualifies?
Firstly, not just any childcare counts for the support you can get.
- Your childcare provider needs to be registered, whether it's a nursery, agency or home careworker.
- Make sure you're using an “approved childcare” provider before checking to see what help you qualify for.
You can see the HMRC rules for what counts as an approved childcare provider on their website.
How many hours can I get?
- You can generally get 15 hours a week of free childcare if your child is between 3 and 4 years old.
- From September this year this is being raised to 30 hours.
- This adds up to 140 free hours across the year.
The 30 hours are only free for only 38 weeks per year though which is is basically equivalent to school term times.
You'll have to sign up online for a code to reserve your place, though.
You can actually get some free early education and childcare support if your child is younger. At 2 years old, your child could qualify if you're on certain benefits, like Income Support, JSA or Universal Credit. Again, you should check if you think you might be eligible.
Are there any requirements for me or my partner?
To qualify, you and your partner (if you have one) have to be:
- working at least 16 hours a week
- earning at least the National Minimum Wage (but under £100,000 a year).
The minimum wage changes based on how old you are:
- 21-24, you'd need to earn a weekly average of at least £111.20.
- 25+, you'd need to earn a weekly average of at least £115.20.
This is a scheme to help working parents, so families where one parent doesn't work, or both parents don't work, will usually not be eligible for these additional 15 hours.
What is the Tax-Free Childcare Scheme?
The Tax-Free Childcare scheme can get you up to £2,000 a year per child to help with childcare costs. Again, this has to go toward an approved provider, but the government essentially chips in £2 for every £8 you're spending.
It might not sound like a lot, but it can make a big difference over the course of a year. As always, not everyone qualifies for this, and you're out of luck if you're already claiming Universal Credit, Working Tax Credit, Child Tax Credit or childcare vouchers.
Are there any other kinds of Tax Credits I can claim?
Speaking of Tax Credits, this is another one that people often lose out on. Child Tax Credit is reasonably well known, but many parents don't realise that you can sometimes claim extra Working Tax Credit to help with approved childcare costs.
Luckily, there's a Tax Credits Helpline you can call to get it all sorted out.
Will my employer help with child care costs?
The government isn't the only source of support, of course. Childcare voucher schemes sometimes offered by employers are a good example of this – as are nurseries offered by some companies.
You do have to understand the benefits you are being offered here, though. Some of these types of support mean you have to pay some extra Income Tax and National Insurance and you might be better off choosing a different option. If your employer simply gives you cash to cover your costs, for instance, or pays for your childcare outright, the taxman's whiskers will start twitching.
Again always talk to your HR department to undertand what the benefit will mean to your pay packet. Ask lots of questions so you go in with your eyes open and you shouldn't get wrong-footed. Your employer is offering these benefits to help you after all, but personal circumstances mean that they won't suit everyone.
The government provides a childcare costs calculator on their website to help you work out which option would be best for you.
Is there any help for people still studying?
If you're studying at school or beyond, you might be able to apply for extra help. If you're under 20, for example, the Care to Learn scheme offers weekly payments while you study. If you're in further or higher education, then Discretionary Learner Support or Childcare Grants might be on offer.
Bringing up children while you work or study is never going to be cheap or easy. It doesn't need to be as hard as it is for so many, though. Check your eligibility online to make sure you're not missing out.
Claiming money back from HMRC
It's also worth using our tax refund calculator to check if you or your partner are due any money back from HMRC for the cost of any work related travel. That won't give you any on-going support for your childcare but a lump sum back from HMRC can certainly be put towards it.