Help with childcare costs

The cost of childcare can take up a large chunk of the family budget. Help with childcare costs is available from the government and employers – from Tax-Free Childcare to free childcare. Working families may get £2,000 per child each year towards childcare with Tax-Free Childcare.

Check what help you could get with childcare costs

Temporary changes to the eligibility criteria mean you might still be able to get 30 hours free childcare and tax-free childcare even if your working patterns have changed because of the coronavirus outbreak.

Tax-Free Childcare

What is Tax-Free Childcare?

Tax-Free Childcare is a government scheme to help working parents with the cost of childcare in England, Scotland, Wales and Northern Ireland.

It can pay for:

  • registered childminders, nurseries and nannies
  • registered breakfast, after-school clubs and playschemes, holiday schemes
  • registered schools (not including school fees, unless your child is below the compulsory school age)
  • homecare workers working for a registered homecare agency.

You can use Tax-Free Childcare at the same time as using 15 hours or 30 hours free childcare.

However, you can’t use Tax-Free Childcare at the same time as:

  • Universal Credit
  • Tax credits
  • Childcare Vouchers.

Who can get it?

To qualify, a parent or parents normally need to:

  • Be working and have children under 12 – or under 17 if your child has a disability. They stop being eligible on 1 September after the child’s 11th birthday. Adopted children qualify, but foster children don’t
  • Earn at least £142.56 a week on average each. This is equivalent to 16 hours at the National Minimum Wage or National Living Wage.
  • Have no more than £100,000 adjusted net income per year, per parent. Find out more about adjusted net income on the GOV.UK website
  • Be employed or self-employed. If you or your partner are on maternity, paternity or adoption leave you might still qualify. You can apply if you’re starting or re-starting work within the next 31 days.

Do you have caring responsibilities, or are ill or disabled and so not able to work? Then you’ll still qualify for a childcare account if one parent is in work and the other isn’t able to work and receives any of the following benefits:

  • Carer’s Allowance
  • Incapacity Benefit or long-term Incapacity Benefit
  • Severe Disablement Allowance
  • Contribution-based Employment and Support Allowance
  • National insurance credits because of incapacity or limited capability for work.

How much is it?

For every £8 you pay into your childcare account, the government will pay in £2 – up to a maximum of £2,000 per child each year, or £4,000 per disabled child each year.

So if you have one child and you pay in £8,000 into your childcare account, the government will pay in £2,000. Once you put the money in, it’s normally topped up by the next working day.

Payments into your account will normally take one working day for debit card payments and three working days for bank transfers. Payments will show as ‘available funds’ once they have processed.

The government contributions are limited to £500 every three months or £1,000 for a disabled child. To get the maximum contribution you must contribute to your online account in every three-month period or quarter of the year.

Others, such as grandparents or family friends, can also pay into the account.

How to apply

You apply online by setting up a childcare account on the GOV.UK website

You must ‘reconfirm’ your eligibility every three months. You should get a reminder message to do this. You can do this using your online childcare account.

If your circumstances haven’t changed you can simply confirm this. If they have changed, the government will re-run the eligibility checks.

Are you entitled to 15 or 30 hours of help with childcare costs?

All three and four-year-olds in the UK are entitled to some free early education or childcare.

You can use these free hours at registered childcare providers such as:

  • nurseries and nursery classes
  • playgroups and pre-schools
  • registered childminders
  • Sure Start Children’s Centres
  • holiday schemes, breakfast and after school clubs.

How much you can get depends on which country you live in. You can use Tax-Free Childcare at the same time as using 15 or 30 hours free childcare.

England

How to apply

You can apply online by setting up a childcare account on the GOV.UK website

Some councils list providers who offer the additional hours on their website, or you can contact your childcare provider to see if they offer them. You can find Ofsted registered childcare providers on GOV.UK

Some two-year-olds are entitled to 15 hours of free childcare or early education for 38 weeks. Your child might qualify if they have a disability or you claim certain benefits. Find out if you qualify on the GOV.UK website

You can apply to your local council for these hours. Use the GOV.UK website to find your local council’s application page.

Three and four-year-olds are entitled to 15 hours each week for 38 weeks of free early education or childcare every year.

Some three to four-year-olds are entitled to an extra 15 hours, bringing their total to 30 hours for 38 weeks a year. To qualify for the extra 15 hours of free childcare:

  • both parents must be working, or the sole parent must be working in a single parent family. And must permanently live in England 
  • earn at least £142.56 a week on average each. This is equivalent to 16 hours at the National Minimum Wage or National Living Wage
  • earn less than £100,000 a year.

If you don’t use all your hours in one week, you can’t use them in another week. Many providers average out the hours over the year, so you’d have the equivalent of 22 hours a week. Ask your provider how they do this.

Wales

How to apply

You can apply using your local Family Information Service. Find out more on the FamilyPoint website

Some councils list approved childcare providers – check whether providers are approved on the Care Inspectorate Wales website

Some two and three-year-olds who live in a Flying Start area can get free part-time childcare for two-and-a-half hours a day, five days a week for 39 weeks. Find your local Flying Start service on the FamilyPoint website

Three and four-year-olds can get 10 hours of free early education a week for 48 weeks a year, in a school or funded nursery. This is known as the Foundation Phase.

Some three and four-year-olds are entitled to an extra 20 hours, bringing their total to 30 hours for 48 weeks of the year.

To qualify for the extra 20 hours of free childcare:

  • both parents must be working – or the sole parent must be working in a single parent family. And must permanently live in Wales
  • each parent must earn on average at least the equivalent of 16 hours a week at the National Minimum Wage or National Living Wage
  • each parent must earn less than £100,000 a year.

If you don’t use all your hours in one week, you can’t use them in another week. Many providers average out the hours over the year, so you’d have the equivalent of 22 hours a week. Ask your provider how they do this.

Scotland

How to apply

Visit your local council’s website to claim. You can find this on the mygov.scot website

Some two-year-olds can get 16 hours of childcare a week during term time if they receive certain benefits.

All three and four-year-olds qualify for 16 hours a week of free early learning and childcare during term time.

Northern Ireland

Children are entitled to at least 12.5 hours of free preschool education a week for 38 weeks in the year before they start Primary One.

Universal Credit

Universal Credit is a benefit for people in, and out of, work. It replaces six existing benefits, including Working Tax Credit.

Working families who qualify for Universal Credit can claim back up to 85% of their monthly childcare costs.

You must pay for the childcare upfront first and provide receipts to get money back. You can only claim for childcare that has taken place during your assessment period.

Who gets it?

Usually you and/or your partner will need to:

  • be working (it doesn’t matter how many hours you or your partner work), or
  • have a job offer.

How much is it?

The most you can get back is £646.35 a month for one child, and £1,108.04 a month for two or more children.

You can only claim if your childcare is provided by a government registered or approved childcare provider. For more details, see the GOV.UK website

How to claim your childcare costs

Childcare costs are paid in arrears. This means you’ll usually pay the costs yourself, report the costs through your online account and be paid back on your next Universal Credit payment.

You have until the end of the second assessment period after the childcare took place to report these costs.

For example, if your assessment date (the date you started claiming and get your Universal Credit payment) is the 10th and you want to claim back childcare costs you paid in September, you have until 10 November to report the costs.

You can only claim back childcare costs that have taken place during that assessment period. So if you pay childcare costs more than a month in advance, for example a whole term, you’ll send in your report in the same way and be paid back in instalments over a maximum of three assessment periods.

If you think you’ll struggle to pay childcare costs up front, talk to your work coach.

Working Tax Credit – the childcare element

Working Tax Credit is one of the benefits being replaced by Universal Credit.

If you’re already getting Working Tax Credit, you can continue to claim it until your circumstances change, or you’re asked to apply for Universal Credit.

You can’t make a new claim for Working Tax Credit.

What is the childcare element?

The ‘childcare element’ is one of the elements, or components, that make up Working Tax Credit.

If you qualify, it could cover up to 70% of your childcare costs.

Who gets it?

You can apply for the childcare element of Working Tax Credit if you:

  • work at least 16 hours a week (if you’re a couple, you both need to work at least 16 hours a week)
  • pay for registered or approved childcare. Find out more on the GOV.UK website

How much is the childcare element?

With the childcare element, you can get help with up to 70% of your childcare costs.

The table below shows how much you could get in the 2021/22 tax year:

Number of Children
If you pay up to:
You could get up to:

1

£175 a week

£122.50 a week

2 or more

£300 a week

£210 a week

 

If you pay more than this for childcare, you’ll still only get the maximum amounts listed above.

If you qualify for the childcare element, you won’t necessarily get the full amounts.

How much you get will depend on:

  • your income
  • the hours you work
  • your childcare costs.

Childcare vouchers

The government’s childcare voucher scheme is being replaced by the Tax-Free Childcare scheme mentioned above.

The childcare voucher scheme closed to new members in October 2018.

If you’re already getting childcare vouchers, you can keep getting them as long as your employer continues to offer them.

Directly contracted childcare support

Instead of offering childcare vouchers, your employer might choose to make a direct payment to a childcare provider.

This payment will be deducted from your pre-tax salary in the same way as a childcare voucher. You get the same tax-free amounts as you would if you were getting childcare vouchers.

Since October 2018, you’re not able to start getting childcare vouchers or directly contracted childcare.

If you’re already getting this support, you can continue to get it for as long as your current employer continues to offer it.

Workplace nurseries

Some employers set up their own nursery, either at your place of work or at another location.

Your employer decides how much you pay for access to a workplace nursery.

But whether it’s free or subsidised, it counts as a tax-free perk of your job.

Find out from your employer if they offer a workplace nursery.

Grandparents caring for grandchildren

Are you a grandparent or other relative who is caring for children while their parents are at work? Then National Insurance credits are available to help you keep on building up your entitlement to State Pension during this time.

You’ll need 35 qualifying years to get the new full State Pension.

Check your National Insurance record on the GOV.UK website

These National Insurance credits are called Specified Adult Childcare credits and you need to apply for them.

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