Paying for childcare
Many parents say that childcare is too expensive, but there may be help available to meet the costs. For example there are schemes offering free childcare placements to many pre-school children.
If you are a working family help may also be available through the tax credit system or via Universal Credit. Sometimes it is even possible to get direct payments to pay for childcare following a social needs assessment.
Can I get free childcare for a pre-school child?
In England all three and four year olds are entitled to 15 hours of free early education/childcare for 38 weeks of the year. Some two year olds are also eligible, for example any two year old who is in receipt of DLA or who has a statement of special education need or an Education, Health and Care Plan. A two year old also qualifies if their parents are in receipt of certain means-tested benefits.
Free childcare hours can be split between more than one childcare provider. This can include not only nursery classes and private nurseries but also playgroups and childminders. However individual childcare providers are not obliged to offer free places and some have decided not to take part in the scheme.
Working families of three and four year olds are entitled to an extra 15 hours of free childcare. This is on top of the 15 hours of free early education for all parents of three and four year olds, and some two year olds.
Will I be entitled to the extra 15 hours?
You will be eligible if:
- You (and your partner where applicable) earn or expect to earn the equivalent to 16 hours at National Minimum or Living Wage over the coming three months. This equates to £125.28 a week (or around £6,500 a year) for each parent over 25 years old or £118.08 a week (or around £6,000 a year) for each parent between 21 and 24 years old and £59.20 a week for apprentices in their first year. (Rates for the year from April 2018). This applies whether you are in paid employment, self-employed or on zero hours contract.
- You (and your partner where applicable) are seeking the free childcare to enable you to work.
- You (or your partner where applicable) are on maternity, paternity, shared parental or adoption leave, or if you are on statutory sick leave.
Where one parent meets the income criteria and the other is unable to work because they are disabled, have caring responsibilities or have been assessed as having limited capability to work, they are assessed as though they are in paid work. This includes where one partner is eligible for carer's allowance (including an underlying entitlement) or the carer element of Universal Credit.
Where you are in a 'start-up period' (you are newly self-employed), you do not need to demonstrate that you meet the income criteria for 12 months.
If one or both parents is a non-EEA national, the parent applying must have recourse to public funds.
When will I not meet the criteria?
You will not meet the criteria for the additional 15 hours when:
- One or both parents have an income of more than £100,000.
- You (or your partner where applicable) are a non-EEA national and the parent applying does not have recourse to public funds.
What happens if I lose eligibility?
You will receive a 'grace period' - this means you will be able to keep your childcare for a short period.
Once the 'grace period' has lapsed, you should be entitled to the universal 15-hour entitlement.
How do I apply for free childcare?
In Scotland all three and four year olds are eligible to 16 hours a week free early education. Some two year olds are also covered - for example where a parent is in receipt of certain means tested benefits.
In Wales all children are entitled to a free part-time pre-school place of at least 10 hours a week, starting from the school term after their third birthday and lasting for at least 6 terms.
However, the Welsh government is also in the process of rolling out 30 hours free childcare for working parents of three and four year olds. In some parts of Wales you can get 2.5 hours free childcare, five days a week once your child turns two. Contact your local authority for more details about these schemes
Northern Ireland has a programme of funded pre-school education aimed at children in the year immediately before they enter primary one. You can find more information on how to apply from the NI Direct website.
Challenging childcare decisions
If you've encountered barriers that have prevented you from accessing free childcare, visit our refused childcare? page.
Can I get help with childcare costs?
Childcare costs and Working Tax Credit
If you are a tax credit claimant and you pay for registered childcare, you can get help with up to 70% of your childcare costs via Working Tax Credit. For childcare costs to be taken into account, you must either be:
- A lone parent who works at least 16 hours per week.
- A couple who both work 16 hours or more a week.
- A couple where one member of the couple works 16 hours or more a week and the other is entitled to Carer's Allowance, or getting certain disability benefits (or in prison or hospital).
The maximum amount of childcare that can be taken into account is £175 per week for one child and £300 per week for two or more children.
Since 70 per cent of childcare costs can be met, the most that can actually be paid towards childcare costs is £122.50 a week for one child and £210 a week for two or more children. These are the maximum amounts payable and the actual amount you will get depends on your income and family circumstances.
Childcare costs and Universal Credit
Under the new Universal Credit system that is being introduced to replace tax credits and other means tested benefits, you can also get help with any registered childcare costs you pay for in order to work.
You can get up to 85 per cent of your costs met. The maximum amount of costs that will be taken into account is £758.33 a month for one child and £1,300 a month for two or more children.
However, since only 85 per cent of costs are met, this means that maximum amounts payable towards childcare are £646 a month for one child or £1,108 a month for two or more children.
Childcare costs are included in your Universal Credit claim so long as you do some paid work - no matter the number of hours. If you are a couple you must both work or one of you must work and the other partner must either care for a severely disabled person or have a limited capability to work due to their own health problems.
Tax-free childcare scheme
The government has a new tax-free childcare scheme for working families. The scheme helps with childcare costs for children aged under 12 (under 17 if a child is disabled). To qualify you must be working and have earnings that are at least equivalent to the national minimum wage x 16 hours. This is currently £131.36 for people aged 25 and above.
If you are a couple you must either both be working and have earnings of this level or one of you must have eanings of that level and the other partner be in receipt of certain disability benefits or carer's benefits such as Carer's Allowance.
In looking at whether you earn enough to qualify, the government assess your average earnings over a three month period. This means someone aged 25 or over should be eligible so long as their earnings over a three month period is at least £1707.68.
Despite its name, this new system has nothing to do with the tax system. Instead, parents can open an online account, which they will use to pay for registered or approved childcare. For every £8 you pay into your child's account, the government will add a top up payment of £2.
Normally the maximum that the government will contribute is £2,000 per child per year, assuming you contribute £8,000. However, if a child is disabled, the maximum government contribution increases to £4,000 per year, assuming the parent contributes £16,000.
Warning! - If you access tax-free childcare, you cannot get any tax credits or Universal Credit. This means all of your tax credits/Universal Credit stops, not just any payments you get towards childcare. In most cases you will be better off getting tax credits or Universal Credit, so make sure you get advice before applying for tax-free childcare.
Employer supported childcare
Some employers offer support with childcare costs by either offering workplace childcare or by offering childcare vouchers so that an employee can buy registered or approved childcare. This is often done via a 'salary sacrifice scheme', whereby an employee agrees to accept lower earnings in return for the assistance with their childcare.
However new applications for childcare vouchers have now been scrapped and replaced by Tax Free Childcare. If you are already using childcare vouchers, you can either continue to use them, or you can change to Tax Free Childcare. However bear in mind that if you move onto Tax Free Childcare you will also have to give up any tax credits or Universal Credit that you receive.
Help from social services
You may also wish to approach your local social services (social work in Scotland) department to see if they will offer support to help you juggle work and caring - such as organising alternative childcare or providing direct payments towards additional childcare costs.
When assessing your needs as a carer, they should consider the impact that caring has on your ability to continue in employment or move into work.
What type of childcare can I access?
Read our information about the early years and childcare options your child may be entitled to.
- Join our campaign for better childcare.