How to Get Help with Child Care Costs In the UK 

How to Get Help with Child Care Costs In the UK 

Child care costs can take up a huge percentage of a family’s income. Luckily in the UK, families can get help from their employer as well as the government in many forms from free childcare to tax credits. If your child care costs are high, here’s how you can get help.

1. Working Tax Credit (the childcare element)

You can cover approximately 70% of your total childcare costs if you qualify for a working tax credit. You can be eligible for a working tax credit if you usually pay for registered/approved childcare and work for 16 hours+ a week (at least 24 hours a week for couples). You also need to meet specific income threshold. If your total household income annually is £6,420 or less, you are entitled to the maximum working tax credit you qualify for. The more you earn, the less you get. Individuals whose household earnings surpass the annual household income limit for qualification don’t qualify for a working tax credit.

If you have one child and pay up to £175 per week in childcare costs, you can get up to £122.5 per week. If you have two children and pay up to £300 per week in childcare costs, you can get up to £210 per week. You can’t be able to claim if you pay more than the above for childcare. It’s also worth noting that you are not assured of getting the whole amount if you qualify to make a claim. The tax credit you receive depends on factors such as income, childcare costs and the number of hours you work. Furthermore, you must receive childcare from a government approved/registered childcare provider to be able to claim.

2. Free early years childcare and education

You can also get assistance with childcare costs in the UK in the form of free early years childcare and education. 3 and 4-year olds are entitled to free early education/childcare. The amount you get depends on factors such as location.

In England for instance, 3 and 4-year olds are eligible for free early years childcare/education if parents/guardians claim certain benefits of if you have a disability. This benefit is usually 15 hours per week for 38 weeks. The free hours can be used at Ofsted-registered childcare providers like; playgroups and pre-schools, registered childminders, nurseries and nursery classes as well as Sure Start Children Centres. Each parent must earn at least 16 hours per week ( at minimum wage). The earnings must also be £100,000 or less per year.

In Scotland, 3 and 4-year olds are eligible for 600 hours of free education/childcare per year. Families with 2-year olds also qualify for some benefits in Scotland. In Wales, 3 and 4-year olds are eligible for 10 hours of free education per week for 38 weeks. Northern Ireland offers 12.5+ hours of free pre-school education weekly for 38 weeks a year before children begin Primary One.

3. Direct payment

This type of help comes from employers in the UK. As the name suggests, payments are made by employers directly to approved or registered childcare providers. Employers pay depending on your tax profile. Basic rate taxpayers (individuals who pay 20%) get £243 per month. Higher rate taxpayers (40%) get £124 per month while additional rate taxpayers (45%) get £110 per month.

If your employer chooses to pay more than the above to your childcare provider, you will be required to pay tax on the amount unless you make less than £8,500 per year.

4. Childcare vouchers

You can also receive childcare vouchers from your employer in the UK as assistance for child care costs. Beneficiaries can choose childcare providers provided they are approved or registered with Ofsted. Childcare vouchers are non-refundable and usually offered in exchange for a portion of your income. For this reason, it recommendable to avoid collecting excessive vouchers.

To qualify for childcare vouchers in the UK, your child/children must be less than 15 years old. The value of childcare vouchers depends on whether you pay basic, higher or additional rate income tax. Basic rate taxpayers can get childcare vouchers worth £243 per month. Higher rate taxpayers can get childcare vouchers worth £124 per month while additional rate tax payers can get childcare vouchers worth £110 per month.

You must pay tax on extra vouchers given to you by your employer unless your yearly income is less than £8,500. Childcare vouchers are great because they are usually worth more. If you are not in a position to claim tax credits, you are also better off using childcare vouchers.

5. Workplace nurseries

Your employer can also help you lower your child care costs via workplace nurseries. Some employers in the UK have their own workplace nurseries which can be free or subsidised.

6. Tax-Free Childcare Scheme

A Tax-Free childcare scheme has been in force in the UK since April 2017. Under this scheme, you get 20% off from your childcare bill per year, paid for by the UK government. The scheme is open for children who are less than 12 years old or less than 17 years old for disabled children. The government contributes a maximum of £2,000 per child, per year or £4,000 for children with disabilities.

Summary

You don’t have to incur huge childcare costs in the UK. The above options are available to you. You have all the information you need to start paying lower child care costs today. However, feel free to do more in-depth research on eligibility criteria, amount, etc. before choosing any of the above options.

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