Help with paying for your childcare

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Help is available for parents, carers and families to pay for their childcare. This includes benefits that you may be able to claim if you are the parent of a child with additional needs.

Early education for two year olds

Some parents may be able to claim 15 hours a week at a maintained school with a nursery class, day nursery, pre-school, independent school or childminder

Early education for 3 and 4 year olds

Parents can claim 15 hours a week at a maintained school with a nursery class, day nursery, pre-school or childminder.

Childcare Element of Working Tax Credit

Parents may be able to get extra help with ‘registered’ or ‘approved’ childcare costs by claiming the childcare element of Working Tax Credit.

Tax-Free Childcare: 10 things parents should know

Tax-Free Childcare will be available to around 2 million households to help with the cost of childcare, enabling more parents to go out to work, if they want to, to provide greater security for their families.

Ten things to know about the scheme:

  1. You’ll be able to open an online account
    You’ll be able to open an online account, which you can pay into to cover the cost of childcare with a registered provider. This will be done through the government website, GOV.UK.
    Tax-Free Childcare will be launched from early 2017. The scheme will be rolled out gradually to families, with parents of the youngest children able to apply first.
    You’ll be able to apply for all your children at the same time, when your youngest child becomes eligible. All eligible parents will be able to join the scheme by the end of 2017

  2. For every 80p you or someone else pays in, the government will top up an extra 20p
    This is equivalent of the tax most people pay - 20% - which gives the scheme its name, ‘tax-free’. The government will top up the account with 20% of childcare costs up to a total of £10,000 - the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children).

  3. The scheme will be available for children up to the age of 12
    It will also be available for children with disabilities up to the age of 17, as their childcare costs can stay high throughout their teenage years.

  4. To qualify, parents will have to be in work, and each earning at least £115 a week and not more than £100,000 each per year
    The scheme is designed to be flexible for parents if, for example, they want to get back to work after the birth of a child or work part-time.

  5. Any eligible working family can use the Tax-Free Childcare scheme - it doesn’t rely on employers offering it
    Tax-Free Childcare doesn’t rely on employers offering the scheme, unlike the current scheme Employer-Supported Childcare. Any working family can use Tax-Free Childcare, provided they meet the eligibility requirements.

  6. The scheme will be available for parents who are self-employed
    Self-employed parents will be able to get support with childcare costs in Tax-Free Childcare, unlike the current scheme (Employer-Supported Childcare) which is not available to self-employed parents. To support newly self-employed parents, the government is introducing a ‘start-up’ period. During this, self-employed parents won’t have to earn the minimum income level.
    The scheme will be available to parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave.

  7. If you currently receive Employer-Supported Childcare (Childcare Vouchers – see section below) then you can continue to do so
    You do not have to switch to Tax-Free Childcare if you do not wish to. Employer-Supported Childcare will continue to run. The current scheme will remain open to new entrants until April 2018. Parents already registered by this date will be able to continue using it for as long as their employer offers it.
    However, Tax-Free Childcare will be open to more than twice as many parents as Employer-Supported Childcare.
    Employers’ workplace nurseries won’t be affected by the introduction of Tax-Free Childcare.

  8. Parents and others can pay money into their childcare account as and when they like
    This gives you the flexibility to pay in more in some months, and less at other times. This means you can build up a balance in your account to use at times when you need more childcare than usual, for example, over the summer holidays.
    It’s also not just the parents who can pay into the account - if grandparents, other family members or employers want to pay in, then they can.

  9. The process will be as simple as possible for parents
    The process will be as easy as possible for you. For example, you’ll re-confirm your circumstances every 3 months using a simple online process; and there will be a simple log-in service where parents can view accounts for all of their children at once.

  10. You’ll be able to withdraw money from the account if you want to
    If your circumstances change or you no longer want to pay into the account, then you’ll be able to withdraw the money you have built up. If you do, the government will withdraw its corresponding contribution.
    More information will be available ahead of the scheme being introduced so parents making childcare decisions are able to consider all their options.

You can register to receive an email when Tax-Free Childcare is available in your area.

Childcare Vouchers

Childcare Vouchers are a government initiative to help all working parents save money paying for childcare, regardless of their income.

Each parent can claim up to £55 a week of their salary as Childcare Vouchers (maximum £243 per calendar month), which are exempt from tax and National Insurance Contributions (NIC). Childcare Vouchers can then be used to pay for "approved" or "registered" childcare

Vouchers are either issued directly through the employer or through a scheme run by your employer in conjunction with a recognised voucher company. Simply hand the vouchers over to your childcare provider as part or full payment for your childcare costs, just like using gift vouchers in a shop. Not all employers run a Childcare Voucher Scheme, similarly not all childcare providers accept vouchers – so do check first.

From 6 Apr 2011 new joiners paying higher or top rate tax had their allowance dropped so that all tax payers have roughly the same maximum tax gain. The new limits are:

  • Basic (20%) Taxpayer. £55/week vouchers, max annual gain £920. 
  • Higher (40%) Taxpayer. £28/week voucher, max annual gain £610. 
  • Top (50%) Taxpayer. £22/week voucher, max annual gain £590.

The number of children you have doesn't affect this, the limits are the same whether you have one child or more .

Childcare Vouchers can be offered in three different ways by an employer:

  • As a benefit in kind on top of the employee’s existing salary; 
  • As part of a flexible benefits scheme; 
  • As part of a salary sacrifice scheme (i.e. part of your salary is given up for vouchers).

The benefits of using vouchers

  • Save up to almost £2,000+ per family depending on your personal and employment circumstances. 
  • Help budget for childcare.

Which should you choose – Working Tax Credit or Childcare Vouchers?

In general, the Childcare Element of Working Tax Credit pays up to 70% of childcare costs for families on low incomes. For many families, the value of this means-tested benefit easily outweighs the value of vouchers. Families who do not qualify for Tax Credits, or benefit at a very low level, will generally be better off opting for the vouchers. HMRC has developed a Childcare Indicator Calculator which tells you whether you are better off with the childcare element of WTC or Childcare Vouchers.

Working Tax Credit or Childcare Vouchers – A quick guide

A simple rule of thumb is that if you’re receiving Working Tax Credit you will be better off not using vouchers if you have:

  • One child and a family income under £22,000 
  • Two children and a family income under £27,000 
  • Three (or more) children and a family income under £31,000

Other factors to bear in mind when deciding whether to take vouchers:

  • If vouchers are offered on top of your salary - Vouchers 
  • If you are getting less than £545 a year in total from Tax Credits – Vouchers 
  • If you are getting more than £545 in total from Tax Credits and have a high income - Vouchers (there are more savings to be gained from claiming the tax and NIC exemptions with vouchers) 
  • If you are getting more than £545 in total from Tax Credits and have a low income - Childcare element of Working Tax Credits ( there are less savings to be gained from claiming the tax and NIC exemptions with Childcare Vouchers) 
  • If your childcare costs are more than £175 per week for one child or £300 per week for two or more children - Generally, you will benefit from taking Childcare Vouchers to pay for the amount that your childcare costs exceed the upper limit of the Working Tax Credit allowance

Check your own circumstances carefully before deciding which help is most applicable to you. You might wish to seek independent advice before making a decision.

Other sources of financial support

Other benefits, some of which you may be able to claim as the parent of a child with additional needs, include:

Disability Living Allowance

Disability Living Allowance (DLA) is the main benefit for disabled children. It provides extra money for people needing help with personal care / supervision to ensure they are safe and help with getting around outdoors.

Carer's Allowance

Carer’s Allowance (CA) is for people who are looking after a sick or disabled person. It is means-tested but not affected by any savings you may have.

Child Tax Credit

Child Tax Credit (CTC) can be claimed by anyone with a dependent child. You can apply whether or not you work and it’s paid in addition to Child Benefit.

Working Tax Credit

In addition to the Childcare Element of Working Tax Credit, you may qualify for the other elements of this benefit if you have a child and you (or your partner, if you have one) are working at least 16 hours a week. For more information, or to speak to an information officer directly, contact the Families Information Service helpline.

Care to Learn Funding

Care to Learn Funding is available for a parent under 20 to help fund childcare costs whilst studying. This can be up to £160 per child per week.

You can get Care to Learn if:

  • you’re a parent under 20 at the start of your course 
  • you’re the main carer for your child 
  • you live in England 
  • you’re either a British citizen or a national of a European Economic Area (EEA) country 
  • your course is publicly funded (check with your school or college) 
  • your childcare provider is registered with Ofsted or the Care Quality Commission

You can get an application pack by calling the Learner Support Helpline on 0800 121 8989 or visit the GOV.UK website

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Families Information Service

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