How to reduce childcare costs
Hundreds of thousands of parents are not claiming the help they could get from the Government
If there’s one thing that unites working parents, it’s that the cost of getting children looked after while they do their job can take almost all they earn.
But hundreds of thousands of parents who could get a fifth off those costs are not claiming the help they could get from the Government. It is called “tax-free childcare” and for every £80 you pay for childcare, the Government pays £20 more, up to a maximum payment per child of £500 per quarter – £2,000 a year from the scheme.
It’s available if your child is under 12 (or under 17 if they have a disability). You and, if you have one, your partner must be working for at least 16 hours per week and earn at least the national living wage – currently £7.83 an hour, rising to £8.21 an hour from April (£7.38 and £7.70, for under-25s).
There is also an upper earnings limit of £100,000 a year, which you and your partner must be below. Tax-free childcare does not involve your employer and can be claimed by all workers and self-employed people within those earnings limits (no limit for newly self-employed).
The childcare must be provided by a registered care provider and both you and they must register and operate the scheme through the Government website. Your payments to the childcare provider are made through the website. You must confirm your details online every three months or you will be booted out of the scheme.
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If you already receive tax credits or Universal Credit you may be better off on those benefits (which could be affected), rather than claiming tax-free childcare. So check carefully which is better for you on the gov.uk website. If you already get childcare vouchers through your employer, it may be better to keep them; the gov.uk website will help you decide.
In addition to tax-free childcare there are also schemes that provide up to 30 hours of completely free childcare. These differ around the UK. For more information, go to familyandchildcaretrust.org or gov.uk and search “tax-free childcare” (this website needs careful study; also search “30 hours free childcare”).