Budget 2023: Childcare support to be boosted for children from nine months and for parents on universal credit – here's what you need to know
Eligible parents of children as young as nine months in England are to be offered up to 30 hours of government-funded childcare each week. Meanwhile, parents who get universal credit will see the maximum amount they can claim for childcare costs raised. Both announcements form a package of new measures designed to help parents, revealed by the Chancellor in the Budget.
Below we explain what the childcare shake-up means for you. For more on today's announcements, see our Budget round-up, Pensions shake-up and Energy Price Guarantee to remain at £2,500 MSE News stories.
Watch Martin Lewis's Budget round-up video
You can also watch MoneySavingExpert.com founder Martin Lewis's Budget round-up below; information on childcare can be viewed from three minutes and 45 seconds to six minutes and 13 seconds.
What the childcare changes are and when they are happening
Chancellor Jeremy Hunt has unveiled a string of new measures to help working families with the cost of childcare. In summary:
Parents who claim universal credit will see the maximum monthly amount they can claim for childcare rise from this summer. This will increase from £646 to £951 for one child, and from £1,108 to £1,630 for two or more children. For the first time, a portion of this will be paid upfront, rather than claimants having to pay the full costs themselves and then apply for reimbursement after the care has taken place. Parents will continue to be able to claim a maximum of 85% of their costs. To see if you're eligible for universal credit, do our 10-minute benefits check.
Martin Lewis, MoneySavingExpert.com founder, said: "We do not have enough data to do exact calculations yet, but it looks like for those who have high childcare costs and are currently on tax credits and are entitled to universal credit, many will be better off applying to switch to universal credit once this comes in.
"That is not without risks – because deductions can be made from universal credit, which are not made from tax credits. This will not be a simple exercise and you should always get one-on-one benefits advice before making the decision, but it's likely many more people who have high childcare costs will be better off moving than were previously."
Eligible parents of children in England aged nine months to school age will get between 15 and 30 hours a week of funded childcare. This scheme is being introduced gradually, so while parents with children under two now will get some benefit, in the long term though it's parents of children who have not yet been born who will benefit the most.
To be eligible, each parent will need to earn at least the equivalent of 16-hours per week at the national minimum wage over the upcoming three month period from when they apply. And they also need to each have taxable income of no more than £100,000.
Initially, eligible parents of children aged two will have access to 15 hours of funded childcare from April 2024, followed by children aged from nine months from September 2024. Eligible parents of children under school age will have access to the expanded 30 hours of funded childcare from September 2025. See the table below for more, or read our Help with childcare costs guide for more info on what's currently on offer.
What 3-4 year olds get | What 2 year olds get | What children aged 9 - 23 months get | |
|---|---|---|---|
How it works now | All get 15 hours OR 30 hours if eligible | Usually none | None |
From April 2024 | All get 15 hours OR 30 hours if eligible | 15 hours if eligible | None |
From September 2024 | All get 15 hours OR 30 hours if eligible |
15 hours if eligible | 15 hours if eligible |
From September 2025 | All get 15 hours OR 30 hours if eligible | 30 hours if eligible | 30 hours if eligible |
Funding for childcare will be given to Northern Ireland, Scotland and Wales
Government-funded childcare hours fall under the 'Barnett formula', which means each of the devolved nations is given equivalent funding but has the ability to independently implement it.
A spokesperson for the Northern Ireland Assembly said that the funding change would be allocated in the Northern Ireland Budget, adding: "In the absence of an Executive, the Secretary of State is currently considering the Budget for 2023/24."
Scotland's Children's minister Clare Haughey said: "We are already progressing our plans to expand our childcare offer even further – providing free early learning and childcare to one and two-year-olds, starting in this Parliament, with children who will benefit most."
We've contacted representatives from Wales will update this story when we know more.
Universal credit follows the same guidelines in England, Wales and Scotland. Scotland has some extra flexibility when it comes to receiving the payments, known as 'Scottish choices'. Northern Ireland has a slightly different system. We are confirming with individual nations about the announced changes and we will update this story when we know more.
Childcare isn't changing for those who get working tax credits
There are no changes to the provision of childcare for those who claim working tax credits. If you pay for approved childcare and receive working tax credits you can currently claim up to £122.50 a week for one child, and £210 a week for two or more children.
Some may be better off switching to universal credit as a result of the changes, but there are several things you need to be aware of beforehand. See our Should I switch to universal credit from tax credits or income support? guide for full info.
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10 December 2024
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