This content originally appeared in the MSE weekly email on 3 June 2015.
While the Prime Minister is touting more free childcare hours for three and four-year-olds, there's a hidden big change to urgently consider.
This week, new plans were announced to give working parents in England with three or four-year-olds 30 hours/week of free childcare. If made law, pilot schemes will start in September 2016 (though there's scepticism whether it's deliverable).
Yet there are other, more urgent, big changes coming:
- Are you due childcare tax credits (average payout £3,000)? Our rule of thumb is: "If you pay for childcare and work 16+hrs a week, or are a couple both working 16+hrs, and have total family income under £46,000, check if you're eligible." Note – we're not saying you ARE eligible, just that it's worth checking. Read Am I due childcare tax credits?
- Does your employer offer childcare vouchers? Here, you trade in pre-tax salary for vouchers to spend on childcare. Eg, to get £1,000 of vouchers, you forgo £1,000 of salary, but after basic-rate tax and National Insurance that's only worth £700ish in your pay packet, so you're £300 up. Anyone can do this, even if their partner doesn't work, provided their employer offers it. See our Childcare Vouchers guide.
- Warning. Childcare vouchers end in autumn UNLESS you sign up beforehand. And from then, 'Tax-Free Childcare' starts. Working parents – if a couple – both must work can put £80 in an account to pay for childcare and £20 is added (max addition £2,000/year per child).
See full Tax-Free Childcare info. At that point, the current childcare voucher scheme closes to new applicants. Each scheme has winners and losers, so you need to decide ASAP which is best for you. See our full analysis on childcare vouchers vs Tax-Free Childcare.
- Free childcare for three and four-year-olds. In England, for a min 38 weeks a year you're entitled to 15hrs/week of free childcare. From 2017 (earlier for some) this could double to 30 hours free per week. In Scotland, Wales and Northern Ireland, you'll still get between around 10-15hrs/week, but it varies by country. See free childcare info to see if you qualify.
- Help looking after kids in school holidays. Many councils, schools and youth groups have subsidised summer clubs. Even if this is the only time you pay, you can still be eligible for tax credits or use vouchers. See summer help info.