Childcare costs in the UK are among the most expensive in the world. Yet every year, thousands of pounds’ worth of help with childcare costs go unclaimed. Here is a guide to help you find out what you are eligible to claim.
- Who is entitled to 15 hours free childcare?
- Who is entitled to 30 hours free childcare?
- Who is entitled to childcare vouchers?
- Am I entitled to childcare tax credits?
- Tax-free childcare
- Can I claim universal credit?
- More information
Who is entitled to 15 hours free childcare?
Currently, in the UK, all three and four-year-old children are entitled to 15 hours of free early education each week. This is only available during the 38 weeks of school term-time.
In addition to the above, some children from the age of two years old are also entitled to free early education. To be eligible the parents need to be getting a benefit such as Income Support, Universal Credit, Child Tax Credits or Working Tax Credits, alternately the child could have Special Educational Needs or a disability. If you think that you or your child are eligible, your local authority will be able to tell you more.
Who is entitled to 30 hours free childcare?
From September 2017 the government increased its free childcare scheme for three and four-year-olds to 30 hours. This free childcare scheme includes registered childcare through nurseries, nannies, child minders and similar services.
To be eligible to claim your 30 hours free childcare, you and your partner (if you have one) must each work more than 16 hours a week and earn a minimum of £120 a week. You aren’t eligible if you or your partner has a taxable income of more than £100,000.
Who is entitled to childcare vouchers?
This vastly underused scheme is only available to working parents through an employer. Most companies run what’s known as a ‘salary sacrifice’ scheme which allows you to purchase childcare vouchers via your salary at a pre-tax rate. The childcare vouchers can then be used to pay for your childcare. So, essentially, you’re buying childcare without paying National Insurance (NI) or tax on it and saving yourself money.
Not all companies provide childcare vouchers so you should check with your employer to see if they are actually on the scheme. It is also important to check with your childcare provider to ensure that they accept childcare vouchers.
You can buy up to £55 a week of vouchers (per parent).
Am I entitled to childcare tax credits?
What we’re talking about here is the childcare element of working tax credit (not to be confused with child tax credits. With childcare tax credits, you can get up to 70% off your childcare costs, so it’s worth investigating as many people miss out on this benefit.
The eligibility criteria depend on the number of kids you have, the cost of your childcare and your circumstances at home. The Gov.uk website has a helpful tax credit questionnaire to help you work out if you are entitled to childcare tax credits.
Tax-free childcare is a new scheme that allows parents to set up an account in which, for every 80p you put in, the government will add 20p – giving you your basic-rate of tax back on what you pay. It’s a 20% tax perk that the government tops up to a maximum of £2,000 per child, per year. You have to open a special account to pay childcare money into and whenever you do, the government will top it up on the same day. Put in £80 on Monday, and it will be boosted to £100, hours later. If you have a disabled child, then the entitlement is more.
Unlike childcare vouchers, you don’t have to go through an employer to use the scheme, so that’s good news for the growing number of self-employed parents out there. The scheme will run alongside, and eventually replace, Childcare Vouchers scheme, which will close to new applicants from April 2018, from when you won’t be able to use both scheme.
As always, there are a few conditions. If you’re a lone parent, you need to be earning at least £120 a week to qualify. If you have a partner, you both need to earn that much each. You both also need to earn less than £100,000 a year before tax in total.
There’s a staged rollout starting with younger and disabled children first. You can register or ask for email updates on the government’s Child Care Choices website.
Can I claim universal credit?
If you are a single parent of a child under five year’s old you may also be able to claim Income Support. This will eventually be replaced by Universal Credit.
If you’re eligible for Universal Credit, you may be able to claim back up to 85% of your childcare costs for children under 16.
You (and your partner if you live with them) will usually need to be working to apply, and if you meet other qualifying criteria, then you may be able to claim up to £760.42 for a child and £1104 for two kids.
Good to know:
Some of these schemes, such as tax credits, vouchers and tax-free childcare can be used against summer activities too, like holiday camps.
The area of childcare entitlement is a rather complex one and is entirely dependent on your own situation. Here are a few useful websites to help you find out what you are entitled to: