The time has come for the kids to go back to school. And whether you think it’s fan-bloody-tastic that you’ll get a bit of breathing space, or you’ll be sad to miss out on all the mid-afternoon cuddles, this new family schedule is here to stay. Also along for the ride are some new seasonal childcare costs – oh joy – but did you know you can get up to £2,000 each year from the government to help pay for them?
Introduced in 2017 to replace Childcare Vouchers, the Tax-Free Childcare scheme helps pay for things like childminders and nurseries, after school clubs and home care agencies. But only a third of working parents in the UK know it exists.
Worth up to £2,000 a year (paid in four quarterly installments), you can claim Tax-Free Childcare AND claim 30 hours free childcare if you qualify for both. However, you cannot claim Tax-Free Childcare at the same time as claiming Universal Credit, Working Tax Credit or Child Tax Credit. To figure out which one could leave you better off, use the Gov.UK Childcare Calculator.
Your eligibility depends on:
You can usually get Tax-Free Childcare if you (and your partner, if you have one) are in work, on sick leave, or on parental leave for another child.
You need to earn at least the National Minimum Wage for 16 hours a week on average, but less than £100,000.
Your child needs to be 11 years old or younger and usually live with you.
And your nationality needs to be from within the European Economic Area (EEA).
Many working parents are struggling to balance childcare costs with office hours, with a staggering 96% agreeing that childcare costs are too high. In the same survey, carried out by Perrys Chartered Accountants, 84% of part-time working parents said they would work longer hours if childcare was cheaper.
These survey results come as no surprise, owing to the astronomical costs of childcare in the UK. For example, the average cost of sending a child under two to nursery for 25 hours a week is £127. This contributes to childcare costs that, on average, make up around 33% of a family’s outgoings – up to 29% higher than in other European countries.
Kate Clifford, a part-time working parent of three who took part in the survey, commented:
“Since I returned to employment, my husband and I haven’t taken time off together. We share our annual leave in order to reduce the costs of childcare during the school holidays. It can be incredibly expensive with three children attending a club daily during a five-day week. Fortunately, the company I work for is flexible and allows me to work my hours around childcare arrangements to help me to minimise costs. However, not every working parent has this option.”
Lifetise have whipped up a smart interactive tool to figure out the best combination of working hours and childcare for your family. It’s free, easy and really helpful for getting a bit of clarity.
Learn more about the scheme and check your eligibility with the following links:
Know any other parents who might find this article useful? Only a third of working parents know about the Tax-Free Childcare scheme, so why not send them this article to spread the word?
Happy new school term!
Join the thousands of people who get our weekly musings on money, great products, top tips and a dollop of opinion.Sign up to Holly's Blog
What have other people been doing? Learn from their experiences.
If you're more clued up about Peppa Pig than private pensions, you could be a Tired Parent. Read our quick and easy tips on life insurance, wills, and nest eggs for the little ones.Tired Parents