What help can I get with my childcare costs?

Most working parents are entitled to financial support with their childcare costs (provided they are using registered childcare), and yet many parents are missing out because they don’t realise they are eligible. In our most recent Northern Ireland Childcare Survey, almost a third of parents who were using childcare in Northern Ireland responded that they were not claiming any financial support.

The UK Government provides financial support towards the cost of registered childcare for eligible families. In all cases at least one parent must be working, however the best form of help will depend on a number of factors including household income, cost of childcare, working hours, number of children and whether there are any disabilities or additional care needs within the family.

There are four main forms of financial support with childcare available for working parents:

• Universal Credit
• Tax-Free Childcare
• Tax Credits
• Childcare Vouchers.

Universal Credit and Tax-Free Childcare are available for new claimants, whereas Tax Credits and Childcare Vouchers have now closed to new entrants, so if you aren’t already claiming these, you won’t be able to start now.

Universal Credit

Universal Credit has replaced Tax Credits as the main means-tested benefit for adults of working age. Universal Credit provides parents with 85% of their eligible childcare costs for children under 16 (17 for children with disabilities). The maximum support with childcare that can be claimed through Universal Credit is £646.35 per month for one child and £1,108.04 per month for two or more children. As this is a means-tested benefit, the amount that a household receives will depend on household income and other circumstances (eg savings). Parents must be working but there is no minimum number of hours that have to be worked.

In some cases it can be beneficial to claim Universal Credit alongside Childcare Vouchers (see below for more information on Childcare Vouchers).

For more information on Universal Credit, refer to the ‘Universal Credit factsheet’ available on our website.

Tax-Free Childcare

Tax-Free Childcare allows eligible working families to claim 20% of their childcare costs, up to a maximum of £2,000 per child per year (£4,000 for a child with a disability), from the Government. In order to claim £2,000 per year for a child through Tax-Free Childcare, a family would have to have childcare costs for that child of £10,000 per year.

Tax-Free Childcare is available to parents of children under 12 (17 for children with disabilities). Both parents, or one parent in a single-parent household, must be working (this includes self-employed), and earning between £142.56 per week (£133.76 per week if the parent is under 23) and £100,000 per year. Tax-Free Childcare cannot be claimed alongside any of the other forms of financial support for childcare costs. In a two parent household, both parents can be working and earning up to £100,000 each per year each and still be entitled to Tax-Free Childcare.

For more information on Tax-Free Childcare, refer to the Comprehensive guide to Tax-Free Childcare available on our website.

Tax Credits

Before the introduction of Universal Credit, Tax Credits was the main means-tested benefit for working parents. This benefit provides parents with 70% of their eligible childcare costs for children under 16 (17 for children with disabilities), however the amount that a household will actually receive will depend on household income and circumstances. To be eligible parents must be working at least 16 hours per week.

In some cases it can be beneficial to claim Tax Credits alongside Childcare Vouchers.

Tax Credits has been replaced by Universal Credit, and those currently in receipt of Tax Credits may move to Universal Credit if they have a significant change of circumstances or by 2023 at the latest. There are no new claims for Tax Credits and we would advise anyone considering moving from Tax Credits to Universal Credit to seek independent advice before they do so, as once they move, they cannot go back, even if they would be financially better off.

For more information on Tax Credits, refer to the comprehensive ‘Tax Credits factsheet’ available on our website.

Childcare Vouchers

Childcare Vouchers is a scheme provided by some employers which allows eligible parents to sacrifice up to £243 per month of their salary (before tax and National Insurance are deducted) to pay for childcare for children under 16 (17 for children with disabilities). This results in savings of up to £933 per year, per parent – so up to £1,866 in a family where two parents can use the Childcare Vouchers scheme. You do not receive a higher amount if you have more than one child.

The Childcare Voucher scheme closed to new entrants in October 2018 so if you are not already using Childcare Vouchers, you won’t be able to join the scheme, even if it is offered by your employer. Any parents currently in the scheme can continue to use it provided they make at least one salary sacrifice in every 52 week period and do not change employer and neither parent moves to Tax-Free Childcare

In some cases, Childcare Vouchers can be claimed alongside Universal Credit or Tax Credits.

For more information on Childcare Vouchers, refer to our website.

Working out what is the best support for you

With a number of different schemes available, it can be complex working out what financial help your family is entitled to with childcare. Our advisors can help you work out what the best childcare support is for you. Simply call our Family Benefits Advice Service on Freephone 0800 028 3008 for free, confidential and impartial advice from one of our trained advisors. We will explain all of your options, and tell you why one or other form of support is better. We can help you work out how this may change in the future eg if you wanted to work more hours or move to a new job or are having another baby.

Last year, our advisors identified an average of £2,800 in financial support for parents who contacted the Family Benefits Advice Service for a personal calculation.

To give you the right advice, we will need to know your:

• Household income and working hours
• Childcare costs (help is only available with registered childcare)
• Family circumstances (number of children, any disabilities).

We can also help you work out what financial support you will be entitled to during any period of parental leave, any other support available to parents, and can advise on rights and entitlements for working parents.

Whether you are currently working, considering starting work, thinking of changing jobs, or simply need some advice – we are here to help!

 For free, impartial and confidential advice, contact the Family Benefits Advice Service on 028 9267 8200 or email hello@employersforchildcare.org.