Paying for childcare

Many parents say that childcare is too expensive, but there may be help available to meet the costs. For example there are schemes offering free childcare placements to many pre-school children.

If you are a working family help may also be available through the tax credit system or via Universal Credit. Sometimes it is possible to get direct payments to pay for childcare following a social needs assessment.

Free childcare for pre-school children

England

In England all three and four year olds are entitled to 15 hours of free early education/childcare for 38 weeks of the year. Some two year olds are also eligible, for example any two year old who is in receipt of DLA or who has a statement of special education need or an Education, Health and Care Plan. A two year old also qualifies if their parents are in receipt of certain means tested benefits.

Free childcare hours can be split between more than one childcare provider. This can include not only nursery classes and private nurseries but also playgroups and childminders. However individual childcare providers are not obliged to offer free places and some have decided not to take part in the scheme.

Some working families are entitled to an extra 15 hours of free childcare for three and four year old. This is on top of the existing 15 hours of free early education for all parents of three and four year olds and some two year olds.

See the eligibility criteria for the 30 hour childcare scheme.

The website https://childcare-support.tax.service.gov.uk/par/app/applynow allows parents to apply for the government's new childcare offers, as well as providing details of existing government childcare offers. You can also read about the different options at https://www.childcarechoices.gov.uk/

The scheme will come into law in September 2017.


Scotland

In Scotland all three and four year olds are eligible to 16 hours a week free early education. Some two year olds are also covered - for example where a parent is in receipt of certain means tested benefits.


Wales

In Wales a child is entitled to a free part-time pre-school place of at least 10 hours a week, starting from the school term after their 3rd birthday and lasting for at least 6 terms.


Northern Ireland

Northern Ireland has a programme of funded pre-school education aimed at children in the year immediately before they enter primary one.


Challenging childcare decisions

If you've encountered barriers that have prevented you from accessing free childcare, visit our refused childcare? page.

Help with childcare costs from tax credits

If you pay for registered childcare, you can get help with up to 70% of your childcare costs via working tax credit. For childcare costs to be taken into account, you must either be:

  • a lone parent who works at least 16 hours per week
  • a couple who both work 16 hours or more a week
  • a couple where one member of the couple works 16 hours or more a week and the other is entitled to Carer's Allowance, or getting certain disability benefits (or in prison or hospital).

The maximum amount of childcare that can be taken into account is £175 per week for one child and £300 per week for two or more children.

Since 70 per cent of childcare costs can be met, the most that can actually be paid towards childcare costs is £122.50 a week for one child and £210 a week for two or more children. These are the maximum amounts payable and the actual amount you will get depends on your income and family circumstances.

Childcare costs and Universal Credit

Under the new Universal Credit system that is gradually being introduced to replace tax credits and other means tested benefits, you can also get help with any registered childcare costs you pay for in order to work. You can get up to 85% of your costs met. The maximum amount of costs that will be taken into account is £646 per month for one child or £1,108 per month for two or more children.

Childcare costs are included in your Universal Credit claim so long as you do some paid work - no matter the number of hours. If you are a couple you must both work or one of you must work and the other partner must either care for a severely disabled person or have a limited capability to work due to their own health problems.

Employer Supported Childcare

Some employers offer support with childcare costs by either offering workplace childcare or by offering childcare vouchers so that an employee can buy registered or approved childcare. This is often done via a 'salary sacrifice scheme', whereby an employee agrees to accept lower earnings in return for the assistance with their childcare.

You cannot include any childcare costs you get via vouchers in your working tax credit/Univeral Credit claim. Consequently, if you have the option of getting help with vouchers via a salary sacrifice scheme, you should seek advice about whether this is a better option than getting help with these costs via tax credits/Universal Credit instead.

The government will gradually replace employer supported childcare with a new tax free childcare scheme starting in 2017. 

Tax-free childcare scheme

The government has a new tax-free childcare scheme for working families. This started on 28 April 2017. Initially the scheme is open only to families with a disabled child or to families with at least one child aged under four on 31/8/17. However, it will be rolled out to other families during 2017. 

Despite its name, this new system has nothing to do with the tax system. Instead, parents can open an online account, which they will use to pay for registered or approved childcare. For every £8 you pay into your child's account, the government will add a top up payment of £2.

Normally the maximum that the government will contribute is £2,000 per child per year, assuming you contribute £8,000. However, if a child is disabled, the maximum government contribution increases to £4,000 per year, assuming the parent contributes £16,000.

Warning! - If you access tax-free childcare, you cannot get any tax credits or Universal Credit. This means all of your tax credits/Universal Credit stops, and not just any payments you get towards childcare. In most cases you will be better off getting tax credits or Universal Credit, so make sure you get advice before applying for tax-free childcare

Help from social services

You may also wish to approach your local social services (social work in Scotland) department to see if they will offer support to help you juggle work and caring - such as organising alternative childcare or providing direct payments towards additional childcare costs.

When assessing your needs as a carer, they should consider the impact that caring has on your ability to continue in employment or move into work.

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