Help paying for childcare
Paying for childcare can sometimes seem confusing. Here is an outline of what financial help is available. Please ask any member of staff at this children's centre for any further guidance and information that you need.
How to save money on your childcare costs.
The two main ways to get help towards paying for registered and approved childcare are through:
- the working tax credit &
- childcare voucher schemes
The savings you might make will depend on things like your family’s income and how much your childcare costs are.
Working Tax Credit
If you work at least 16 hours a week, Working Tax Credit can top up your earnings and help with the cost of registered or approved childcare. If you have a partner, you must work 24 hours a week between you (with one person working at least 16 hours) or receive a qualifying benefit to get help with childcare costs. Tax credits are based on your family income, and will not take account of child maintenance paid to you.
Help towards childcare costs
You can get help towards the cost of registered or approved childcare. You can get up to 70 per cent of your childcare costs paid for, up to a maximum weekly amount of:
- £122.50 a week for one child; or
- £210 a week for two or more children.
This childcare payment will be made to the person who is the main carer for the child(ren) in the family. Remember that you can’t pay for the same childcare with childcare tax credits if you use childcare vouchers.
Use the HM Revenue & Customs Tax Credit calculator. It will give you an estimate of the amount of tax credits you will receive from the date of your enquiry to the end of the financial year (5 April).
There is additional support to help you work out whether you are better off using childcare vouchers or the help with childcare costs available through Working Tax Credit. This help can be accessed via the HM Revenue & Customs Childcare Indicator.
How do I apply for tax credits or find out more?
To get an application form or to talk about your claim, phone the helpline on 0345 300 3900 from 8am to 8pm, Monday to Saturday. For general information visit the HM Revenue & Customs website.
Child Tax Credit
Child Tax Credit provides support for families who are responsible for children aged under 16 (under 19 where the child is studying full-time up to A-level or equivalent). There is an extra tax credit payment for children and young people who are disabled.
Childcare voucher scheme
Childcare vouchers are one of the ways in which employers can help their employees with the cost of childcare.
For the employee, National Insurance contributions and tax do not apply to the first:
- £55 a week for basic-rate taxpayers. The saving will be up to £933 a year
- £28 a week for the higher-rate taxpayer. The saving will be £623 a year
- £22 a week for additional-rate taxpayers. The saving will be £606 a year
Each employed parent can claim these exemptions, so you could receive twice the saving.
Childcare vouchers can affect the amount of tax credits you are entitled to. You should always compare your tax credit payments with the savings you would receive if you were to accept the childcare vouchers.
- Before you sign up for a childcare voucher scheme, ask how it affects your pension scheme and other employee benefits.
- You can save up vouchers and use them when you need to, for example, to pay for a holiday playscheme.
- As the cost of your childcare vouchers are deducted from your salary (salary sacrifice), tax credits would be based on your new salary after childcare vouchers have been deducted. Make sure that you inform tax credits of your new household income.
Your employer can also save their National Insurance contributions for each employee receiving childcare vouchers.
This page was last updated on June 15, 2012