Help with childcare costs

Help with childcare costs

Get £1,000s in universal credit & Tax-Free Childcare

Whether you have a wee tot or a big teen, the costs of childcare can be huge. Yet 100,000s of working parents are missing out on £1,000s of help with these costs. Have a read of this guide to find out about the help that's available to you – and don't miss out on anything you're entitled to.

Childcare costs & coronavirus

To get up to 30 hours of free childcare in England and Tax-Free Childcare across the whole of the UK, you'll normally need to earn a minimum income of £142/week. 

While furlough and the Self-Employment Income Support Scheme were running, you could still claim Tax-Free Childcare across the UK (and the full 30 hours of free childcare in England) even if your income had dropped below the minimum required to qualify. 

But now, when you next confirm your eligibility for Tax-Free Childcare and free childcare hours, you'll need to prove you're earning at least £142/week.

If this means you no longer qualify for Tax-Free Childcare, you might be able to claim back up to 85% of your childcare costs through universal credit.

Check whether you're entitled to more help by reading our Benefits check-up guide or using our Benefits Calculator

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Childcare isn't just for little 'uns

The term childcare may conjure up an image of a young child having fun at nursery. But childcare and its eye-watering cost doesn't stop when kids go to school...far from it.

The good news is that many of the schemes offering help with childcare costs cover older kids too.  

For tax credits, you're able to claim child tax credit until the 31 August after your child turns 16. You may also claim if they are under 20 and in non-advanced approved education. But note that this only applies to those who are already claiming tax credits, as they are now closed for new applicants – unless you're receiving the severe disability premium. See our Tax credits guide for more info. 

Who qualifies for Tax-Free Childcare and how much can you get? 

With Tax-Free Childcare, you can claim up to £2,000 a child until the 1 September after your child turns 11 (or 16 for children with disabilities – and for them you can claim up to £4,000). And those still able to use childcare vouchers, can use them until their children turn 15 (16 if they're disabled). 

So...

If you're paying for your tweenie to go to an after-school or summer holiday club that can count too.

You must use a registered provider

Whether you're paying with childcare vouchers, tax credits or Tax-Free Childcare cash, the key is that the childcare provision is registered and regulated. This includes after school and summer clubs, nurseries, playgroups, nanny, childminder or au pairs.

If you ask, most providers will simply tell you if they're registered but you can find out from your local authority's children's services department or search for your nearest family information service on the Family and Childcare Trust website which should be able to tell you about the provision available in your area.

Free childcare for three or four-year-olds

There is free early education and childcare available for all three or four-year-olds across the UK (starting from the term after your child's third birthday).

Currently, in England, you're entitled to 570 hours of free childcare a year (see below for rest of the UK). This is usually taken at up to 15 hours a week for 38 weeks of the year. You can stretch it out longer by using fewer hours a week, but many councils want your child to attend for at least 2.5 hours a week.

You can either use this allowance in school term time, or you can usually use it over the entire year. To get it, simply ask your local nursery or childcare provider if it has space. You must tell it that you want to take advantage of the free 15 hours when you sign up.

Families with a low income may also get free classes for two-year-olds.

In practice, the free childcare provision for three and four-year-olds is offered at a range of places including Sure Start children's centres, nurseries, pre-schools and childminders – and covers those run by the state and run privately. So if you're paying for childcare, you can swap it for this free provision.

Watch out for extra add-ons and potential price rises

You may need to pay for add-ons such as nappies and meals, so in reality your childcare will unlikely be completely free. And many providers have said they have raised prices (or will do so) for paid-for childcare as they look to recoup some of their costs, which they claim is down to the scheme being underfunded. 

Free childcare doubled to 30 hours in England for working parents 

Parents of children between the ages of three and four can get a total of up to 30 hours' free childcare a week (1,140 a year) – if they work and meet certain conditions.

Councils should have their own cut-off points for application on their websites – typically these are 31 December for the spring term, 31 March for the summer term and 31 August for the autumn term.

To qualify for the extra 15 hours of free nursery, you must earn a minimum of the equivalent of 16 hours a week at the national living or minimum wage (£142/week in the 2021/22 tax year), and less than £100,000 a year.

This applies to both parents in a couple – so, a pair each earning £99,999 would still get the extended 30-hour allowance. But, if one parent doesn't work, your child would only get 15 free nursery hours.

However, a growing number of providers have voiced concern that a lack of Government funding towards the cost of providing the 30 hours' childcare could mean it won't be delivered. Four in 10 childcare providers say they may have to close in the next year, a half have raised fees, a third are planning to do so and a fifth will introduce extra charges, according to the latest research from the Pre-school Learning Alliance and Mumsnet.

This means what's available to you will likely depend on local factors including: council funding; nursery costs; number of children at the nursery; and how the nursery adapts.

How to get the 30 hours of free childcare

To get the free 15 hours, you just contact the provider, but for the extra 15 hours, you need to apply for the extra hours' free childcare through the Gov.uk website. If you're approved, you'll receive a code to give to your childcare provider. You'll get the extra hours once the next term starts.

If you're not currently using a childcare provider, you can usually find a list on your council's website.

I live in Scotland, Wales or Northern Ireland, how many free hours can I get?

Childcare is a devolved issue, so you'll have to check what rules apply in your area. See below for what you're entitled to.

  • All three and four-year-olds are entitled to 1,140 hours/year. What type of provider is eligible, and when and where you can take your hours, varies by local authority. You can also get help with childcare for your two-year-old if you receive one of the qualifying benefits.

    To get it, speak to your local authority, or you can contact your childcare provider to see if you can use your free allowance with it. You can also ask another provider if you wish. If you need more help, contact your local authority. You can also use the Scottish Government's Parent Club.

  • Parents of three and four-year-olds across Wales are entitled to up to 30 hours a week of free childcare, across 48 weeks of the year. You can divide the hours up, but at least 10 hours a week needs to be used on early education and 20 hours on general childcare. 

    To qualify, you must earn a minimum of the equivalent of 16 hours a week at the national living or minimum wage, and less than £100,000 a year. This applies to parents in a couple (so each parent must fit the criteria) as well as to single parents.

    Before you apply, check that your chosen childcare provider is registered with the Care Inspectorate Wales.

    To apply, contact your local family information service or see the Welsh Government website for more information. 

  • Three and four-year-olds get a funded pre-school education place through the Pre-School Education Programme, available term-time either on a full-time or part-time basis. Full time amounts to 4.5 hours a day (22.5 hrs/wk), and part-time 2.5 hours of free childcare a day (12.5 hrs/wk) for 38 weeks of the year.

    To get it, apply through the Education Authority's website to get an application form. You can apply to any number of providers, but it's best to select more than one, as your chosen provider might not have enough spaces available. 

    You have to supply the form and your child’s birth certificate to your first preference childcare provider by the deadline. You can find all application deadlines on the Education Authority’s website.

Find out more...

Check the Family and Childcare Trust website for your nearest family information service or check if your child qualifies on Gov.uk.

Check if you can get benefits to help with childcare costs

In the UK the average cost of sending a child under two to nursery full-time is £242 a week, with part-time coming in at £127 a week. But there are two benefits that can help you pay for childcare – in some cases up to 85% of the cost, but you can claim only ONE of them. This is because the new system of 'universal credit' is replacing the old system of 'working tax credit'.

If you're already claiming the 'childcare element' of working tax credit (and your circumstances haven't changed), you can continue to do so. Yet if you're a new claimant (or if your circumstances have changed), you'll need to apply for help with childcare costs through universal credit.    

1. Working tax credit 

If you're already claiming tax credits, you can continue to do so until you need to make a new claim or your circumstances change, in which case you'll have to apply for universal credit. 

With working tax credits you can get help with up to 70% of your childcare costs (paid directly into your bank or building society account each week or month). 

The weekly max payout for one child is £122.50 or £210 for two or more, though what you actually get depends on your income. If you pay more than this a week, you don't get any more help. For full and detailed info, see our Tax credits guide.

If you don't need to make a new claim, and you don't have a change of circumstance, you'll be moved over to universal credit as part of the 'managed migration' currently underway and expected to finish in December 2023. You can read more about this in our Universal credit guide.

You can apply for universal credit before then if you would be better off on it – use our benefits calculator to see what you could get.

2. Universal credit 

You can apply for help with childcare costs under universal credit if you are on a low income, no matter how many hours you work. Under universal credit you can get back up to 85% of your costs, to a maximum of £646.35 a month for one child, and a maximum of £1,108.40 monthly for two or more children. 

How to apply

You can apply via the Gov.uk website. You will need to provide evidence of your costs. This includes a letter from your registered childcare provider, a bank statement proving you've paid your provider, or a cash payment receipt.

You can make a claim up to three months in advance, but you will only get the money after the childcare has been provided.

To read more about eligibility and how universal credit works, see our Universal credit guide. 

Scottish resident on low income?

If you’re a Scottish resident on a low income, and look after a child under six, you may also be able apply for the Scottish Child Payment (£10 a week, increasing to £20 from April 2022).

To qualify, you must be claiming one of the following benefits:

  • Income Support
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Pension Credit
  • Child Tax Credit
  • Working Tax Credit that includes a disability or severe disability element
  • Universal Credit

If your claim is successful, you'll get the payment every 4 weeks until your child turns six. By the end of 2022, the Scottish Government hopes to extend the scheme to all eligible children under 16.

You can apply online using this form. Head to our maternity grants guide for more detailed information on the scheme, 

Do you qualify for Tax-Free Childcare?

Tax-Free Childcare is a Government-backed scheme which helps parents with the cost of childcare. The scheme, which launched in 2017, gives eligible families an extra 20% towards childcare costs. It's slowly replacing the outgoing Childcare Vouchers scheme, which closed to new entrants in October 2018 (it's still available to those who are a member of a scheme, see below for more).

Tax-Free Childcare is designed so that for every 80p you put in, the state will add 20p – so it effectively gives you basic-rate tax back on what you pay, hence the scheme's name.

In total you'll be able to use the scheme to pay for up to £10,000 of childcare per child each year (meaning you'd pay £8,000) – so you could get an extra £2,000 per child (up to £4,000 if your child is disabled) each year. Once your childcare bill exceeds the Government maximum, there's no more financial support for that year. You can still pay for your childcare through the scheme but you won't get a top-up so it might be easier just to pay your child's nursery etc directly.

It's open to all qualifying parents. This includes anyone who's self-employed. However, you (and your partner, if you have one) will need to be in work to qualify – so if you work and your partner doesn't, you won't be able to take advantage. Tax-Free Childcare is also available to single parents.

The scheme's available until the 1 September after your child turns 11 (or 16 for children with disabilities). See full info in our Tax-Free Childcare guide. 

Childcare Vouchers

Many parents can save £100s a year using childcare vouchers, which allow you to pay for childcare from your PRE-TAX salary. The scheme closed for new applicants in October 2018, but if you were signed up before then, are with the same employer, and it still offers them, you can continue to get childcare vouchers. For full info, see our Childcare Vouchers guide.

So which one wins? Tax-Free Childcare or Childcare Vouchers? Well, what works out best will depend on your personal circumstances. But you have to settle for one as you can't apply for both. See full help in our Childcare Vouchers vs Tax-Free Childcare analysis.

Free summer holiday activities

Provision of holiday childcare for school-age children is often a real hit to the finances. Parents either need to lose earning power by taking time off work, or pay for professional childcare.

Here's a few ideas to find what's local to you and get you started in finding affordable and entertaining activities for your kids over the holidays:

Find your nearest family information service (FIS): Check the Family and Childcare Trust website if you're in England, the Gov.wales website if you're in Wales, or the FamilySupportNI website if you're in Northern Ireland, for your nearest FIS that'll give you info on what's going on locally. In Scotland, you can contact your council to find your local FIS.

Check what's available out of school hours: Use the Gov.uk site (for England and Wales) to find out contact details for your council and call to find out if it offers anything (go here for contact details for Scotland and Northern Ireland).

Contact schools, community centres and youth groups: Usually over the summer, and sometimes during Easter and Christmas, thousands of schemes across the UK offer a range of activities for children, from sports coaching to dance and music sessions. Get in touch with them to find out what's on offer.

Is there a school holiday day camp near you? SuperCamps run school holiday day camps for 4-14 year olds (England only) and have some interesting activities on offer. Or you could try Activate Sport summer camps for children aged 5-16 (also England only). For Scotland, Wales and Northern Ireland, try Netmums to see what's on near you.

Can I pay for summer care with tax credits or vouchers/Tax-Free Childcare?

Researching the above is a safe and cheap way to resolve holiday childcare needs and if you need to pay for it, then often you'll be able to use the schemes to help:

Childcare tax credits

You may be able to use your tax credits to help pay for your child's summer activities. If you pay for them to attend, whether it's tennis lessons or camp, if the activity provider is Ofsted-registered, you can claim as you would for an after-school club or childminder.

If you ONLY use childcare during the summer holidays, then you will only be able to claim tax credits for the weeks that you're actually paying for childcare. If you use it throughout the year, but costs go up in summer, then you'll need to estimate the average cost during the year, and then use this with the tax credit helpline when claiming (so spreading the cost).

Childcare Vouchers/Tax-Free Childcare

You can often pay for summer holiday childcare provision with vouchers or Tax-Free Childcare, although it's best to check before booking that the activity you've picked accepts them – again, it'll need to be Ofsted-registered to do so.

More ways to entertain kids:

For more ideas on how to keep your little ones busy, see the following related guides:

Can grandparents benefit from childcare?

It's estimated grandparents provide 1.7 billion hours of childcare every year for more than 1.5 million grandchildren. However, they can't be paid for it using childcare vouchers, Tax-Free Childcare or childcare tax credits, as they don't provide regulated childcare.

However, there is a way for some grandparents (and others) to gain. If you care for grandchildren aged under 12, this can qualify for class 3 national insurance credits (known as specified adult childcare credits). These count towards your qualifying years for a full state pension.

If you retired before April 2016, you need 30 qualifying working years to get the full state pension. If you're retiring after April 2016, that's raised to 35 years. (Read our State pension guide to find out more about qualifying national insurance years.)

If you're looking after grandchildren, and you need extra qualifying years, it's worth getting recognition for the childcare you provide. But, it's not quite that simple. You need to claim these credits – they won't be automatically added to your national insurance record.

For grandparents to be eligible for the national insurance credits, working parents need to give up the national insurance credits they receive when they claim child benefit and transfer them to the grandparent doing the caring – they're transferable credits.

You also need to time your claims. If you cared for a grandchild in the last tax year, you need to apply in the October after the end of the tax year for the credit to be transferred.

You need to fill in the catchily titled form CA9176 and send it off to HMRC. Both you and the parent transferring the credit need to sign the form.

Coronavirus help – your work rights if you need to look after children

While schools are open across the UK, plenty of parents and guardians are still faced with the prospect of their children being sent home at short notice because of coronavirus outbreaks. For working parents in particular this can present a problem, especially if emergency childcare can't be arranged.

However, you have certain rights and options that you should be aware of:

  • By law, employees have the right to take time off work to help someone who depends on them in an unexpected event. However, you DON'T have a legal right to be paid for this time, though some employers may offer paid time off in this situation depending on your contract or your workplace's policy. 
  • There's no official limit on how much time you're allowed to take off. It just must be "reasonable" for the situation. 
  • Look at other options, including taking annual leave or unpaid parental leave. If you do need to spend a longer period away from work, you may also be able to book the time off as holiday, or take unpaid parental leave. Parental leave is available for employed parents who have been with their company for more than a year, and is usually limited to four weeks' leave per year, per child – though it could be extended at your employer's discretion. It's important to note that it's unpaid though.
  • See if flexible working can help. You also have the legal right to ask to work flexibly as long as you've worked for your employer for at least 26 weeks, and it must consider your request and deal with it "in a reasonable manner". This could include asking to change or reduce your hours so you can look after your children.  

    The definition of "flexible" can also be open to interpretation, as demonstrated by a recent Employment Appeal Tribunal case – Dobson vs North Cumbria Integrated Care NHS Foundation Trust.

    In this case, a community nurse successfully appealed against an earlier employment tribunal ruling that had dismissed her claim of unfair dismissal. The nurse, Dobson, had been working fixed days for her NHS trust, but when the trust introduced flexible working, this was supposed to include weekends – something that Dobson couldn't commit to as she had three children, two of whom were disabled.

    Despite having her contract terminated by the trust and losing her initial tribunal case for unfair dismissal, the Employment Appeal Tribunal ruled that the original tribunal hadn't properly considered that there is still a disparity in childcare obligations between men and women which hadn't been taken into account originally by the trust.

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