Working parents - paying for childcare
The information in the tabs below is about financial support including Tax Credits and Childcare Vouchers. For more information on becoming a working parent, maternity and paternity leave and support you can expect from your employer, visit our Working parents/carers web page.
Parents have to become experts in juggling home and work commitments. The Government has introduced a range of ‘Credits’ in order for families to be supported financially and enabling high quality childcare and early education services to be accessed.
It provides support for families who are responsible for children under 16 (under 19 where the child is studying full time up to A-level, NVQ Level 3 or equivalent).
The amount you get is based on your household income. You can claim whether or not you are in work.
Working Tax Credit supports working households on low incomes by topping up earnings. It is made up of a number of elements depending on your circumstances. For example, extra amounts are available to those who work at least 30 hours a week and to those who are working and have a disability. It also includes an element to help with the costs of Ofsted registered or approved childcare, known as the childcare element.
Go to the IR Tax Credits - Do I qualify? What are tax credits? for more information.
If you think you might be entitled to Child Tax Credit or Working Tax Credit, or both, visit HMRC Tax Credits or call the Tax Credits helpline: 0345 300 3900.
Contact them also for a range of resources for people with disabilities, including Braille, audio and large print.
From October 2013 onwards parents who are claiming Tax Credits will be transfered to Universal Credit.
The Department for Work & Pensions guide, 'Universal Credit and your family' explains how it supports claimants who have children they are responsible for. This includes 3 types of additional financial support to help with the costs of bringing up children:
the child element
the disabled child element
the childcare element.
Help from your employer
Sometimes help to pay towards childcare costs can come from your employer with schemes which has been put in place by the Goverment. 'Family-frinedly' employers may offer other support.
This is one of the ways employers can assist their employees with the costs of childcare. Childcare vouchers are exempt from National Insurance Contributions (NIC) for employers and from tax and NIC for employees.
Employees can access vouchers up to £55 a week, or £243 a month as of 2013/14. Vouchers are offered usually as part of a salary sacrifice scheme. Both parents may be able to access vouchers if their employer offers this scheme. The vouchers pay for Ofsted registered or approved childcare and can be saved up to pay for summer holiday care as well spent throughout the year.
Salary sacrifice means that an employee formally agrees to a reduction to their taxable salary and receives this reduction in childcare vouchers. As a result employers can receive up to 12.8% in NIC savings and employees up to 11% (along with savings on their tax). The contract between employer and employee must be updated and incorporate changes as result of the salary sacrifice. Pensions may be affected so this needs to be checked.
The voucher company that has been contracted by the employer will provide the vouchers to employees to ‘pay’ for their childcare. The childcare provider redeems the value of the voucher given by the parent directly with the voucher company. Childcare providers will need to be registered with the childcare voucher company in order to receive payment.
Online calculators/ checkers
HMRC calculator helps parents to decide whether they would be better off receiving tax credits or, instead, taking childcare vouchers from their employer to help with childcare costs.
See also the Family and Childcare Trust Tax Credit Checker on their website.
Some employers will pay towards the costs of childcare in local childcare services run by external organisations for their employees.
Some employers own and run or commission an organisation to run a childcare facility (e.g. a workplace nursery) and offer places for employee's children at subsidised costs.
National Health Service Bursary Childcare Allowance (CCA) is available to students in receipt of an NHS Bursary to enable them to apply for extra help towards any registered or approved childcare costs they may incur whilst training.
This is an income assessed allowance and the final amount awarded will depend upon circumstances and the family income available.
The childcare used must be provided by an Ofsted registered or approved childcare provider, and the child must be aged 15 or under, or 17 or under if the child has learning difficulties or is registered as having special educational needs, on the first day of the academic year.
Employees should seek advice from their employer in the first instance. See also 'Useful contacts' for further help.
New - Tax-free Childcare
The Government is planning to introduce a new tax-free childcare scheme starting from the Autumn 2015 to help working parents including those that are self-employed, pay for childcare costs.
For every 80p that a parent (or another family member, friend,etc) pays into a 'childcare account' the Government will top it up with an additional 20p.
For further details visit the DirectGov website Tax-free Childcare
For further information on help with childcare costs:
HM Revenue and Customs - HMRC Tax Credits or the Tax Credits helpline: 0345 300 3900
NHS Business Services Authority website NHSBSA Childcare
Examples of Childcare Voucher Schemes:
And there are more ....
Hampshire County Council does not recommend or endorse any particular service listed above.