Parents can get extra financial help and other support from the government when it comes to childcare costs. The government has made available a range of schemes to help parents in different circumstances cope with the rising cost of living.
This includes tax-free childcare, which can save families thousands of pounds each year. One parent, who learned of the scheme thanks to Martin Lewis, recently confessed that the programme helped them to save almost £2,000 on nursery fees.
So if you have young children and you’re paying over the odds for childcare, you could be entitled to some government relief. Here, we’ve outlined the scheme available and who is eligible.
Read more: Martin Lewis fan saves almost £2k on nursery fees through scheme he had 'never heard of'
Tax-free childcare
Parents can get up to £500 every three months for each child to help with the costs of childcare. If your child is disabled, this goes up to £1,000 every three months.
Tax-free childcare can be used to be for approved childcare. This includes childminders, nurseries, nannies, after-school clubs and play schemes that are signed up to the Government’s initiative.
If you are eligible, you’ll be instructed to set up an online childcare account for your child. For every £8 that you pay into this account, the Government will pay in £2 to use to pay your provider.
Who is eligible for tax-free childcare?
Eligibility depends on a number of factors, including whether you are working, your income (and that of your partner, if you have one) and your child’s age and circumstances.
If you are working
You can usually get tax-free childcare if you and your partner, if you have one, are in work, on sick leave, on annual leave or on shared parental, maternity, paternity or adoption leave.
If you are not working
You may still be eligible for tax-free childcare if your partner is working and you can claim Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or contribution-based Employment and Support Allowance.
Your income
To qualify for tax-free childcare, you must be earning at least the national minimum wage or living wage for 16 hours a week. This is equal to £1,976 over three months if you’re aged 23 or over.
Your child
Your child must be 11 or under and usually live with you. They stop being eligible for tax-free childcare on the September 1st after their 11th birthday.
Adopted children are eligible but foster children are not.
If your child is disabled and usually lives with you, you may get up to £4,000 a year until 1 September after their 16th birthday. They’re eligible for this if they:
get Disability Living Allowance, Personal Independence Payment or Armed Forces Independence Payment
are certified as blind or severely sight-impaired
Your immigration status
To be eligible for tax-free childcare you must have a National Insurance number and at least one of the following:
British or Irish citizenship
Settled or pre-settled status (or you have applied and you’re awaiting a decision)
Permission to access public funds
If you get tax credits, Universal Credit, a childcare bursary or grant, or childcare vouchers
You cannot access tax-free childcare at the same time as claiming any of the above. There is a calculator available on the Government’s website to check which scheme is best for you.
How to apply for tax-free childcare
You can apply online for tax-free childcare. If you have a partner, you must include them on the application.
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