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When you commit to raising a child, you’re taking on a life-defining decision. From this moment on, everything changes – not least your financial situation. Bringing up kids is hard, expensive work, particularly when you’re holding down a job. Fortunately, there are several kinds of support you can claim to help lighten your load a little. Depending on your situation, you might even qualify for more than one them at one.
Childcare support comes in a few basic flavours. You might be able to get tax relief on your pay, for example, or specific benefit payments to cover your costs. You could also claim completely free childcare places with approved organisations or “Tax-Free Childcare”, where the government tops up the cash you’re saving specifically for childcare costs. If you’re working PAYE, your employer might also have a scheme running to help out. As your circumstances change, the kinds of support to can claim might change, so it’s important to understand the rules.
Child Benefit is generally for people with kids under 16, and comes in at a flat rate of £20.70 (as of 2019/20) a week for your first child. Additional children entitle you to another £13.70 (again, under 2019/20 rates) per week each. If your child stays on at school past the GCSE level, you’re still entitled to Child Benefit until they turn 19. However, you won’t get that automatically unless you reapply for it. Your kids continue to qualify as long as they’re still in full-time “approved education”. This means A-levels (or equivalent), Scottish Highers, NVQs or vocational qualifications up to level 3, traineeships in England or home education (as long as they started it before turning 16). Certain types of “approved training” can also qualify for Child Benefit. Examples include Foundation Apprenticeships in England and Wales, Employability Fund programmes in Scotland and United Youth Pilot courses started before the 1st of June 2017.
One additional little wrinkle to the Child Benefit system is the High Income Child Benefit Tax Charge. While Child Benefit isn’t means tested, this charge does start to kick in once either you or your partner is earning over £50,000 a year. The charge basically boils down to 1% of your Child Benefit for every £100 you earn over the £50,000 threshold. So, by the time you hit £60,000, you’ve burned through your entire Child Benefit amount and get nothing. The strange thing is that a couple each making £49,999 a year each would still qualify for full Child Benefit. However, another couple with one partner earning £51,000 and the other only £20,000 would get hit with the charge.
You can start a Child Benefit claim here.
If you’re claiming Universal Credit, you could qualify for what they call the “childcare element” of the payment. There are a couple of basic rules on who’s eligible for this. For one thing, you (and your partner, if you have one) need to be in work – or at least due to start paid work before your next assessment period ends. If one of you can’t work for some reason (you’re caring for a disabled person or disabled yourself, for example), you might get an exemption from this rule. You might also be exempt for a few other reasons - if you’re signed off work sick, for instance. You also need to be paying the costs for your childcare yourself, and using an approved provider.
As of 2019/20, the most you can claim for childcare in your Universal Credit payment is 85% of your costs. The payment tops out at £646.35 for one child or £1,108.04 if you’ve got more, though. To make your claim, just get in touch with the Department for Work and Pensions. You can do this online or by phone, and need to do it by the end of the next assessment period after you paid the childcare costs.
For more on Universal Credit, look here.
By law, you’re generally entitled to some free hours of childcare each year in the UK. What you can get depends on a few things, including where you live. In England, for example, your 3 and 4-year old kids can get up to 570 hours of free childcare a year. This works out at about 15 hours a week for 38 weeks. The rules in Scotland, on the other hand, mean you can get 600 hours of early education or childcare a year for your kids aged 3-4. In both cases, if you’re on certain benefits or other circumstances apply, any 2 year olds you have might also qualify.
If you’re in England and working, you can sometimes claim an additional 15 hours of free childcare, for a total of 30 hours a week. As of the 2019/20 tax year, you (and any partner) need to be earning at least £131.36 a week for at least 3 months to qualify for this, assuming you’re over 25. If you’re self-employed, you can sometimes average your earnings out over 12 months instead, or ignore the rule altogether in your first year in business. Again, if you’ve got a partner who can’t work for a valid reason, you might still be okay to claim the additional 15 hours. If either of you is earning over £100,000 a year, though, you can basically forget about claiming.
Talk to your local authority or childcare provider about claiming your free childcare.
Under the Tax-Free Childcare system, you can get quarterly payments of up to £500 per child you have who’s 11 or under – to a maximum of £2,000 a year each. You need to set up a specialised online account to get things rolling. After that, for every £8 you spend on approved childcare costs the government pays £2 into your account – basically wiping out the 20% basic rate of tax on what you’re spending.
Again, though, not just any costs can count for the scheme. Tax-Free Childcare counts for things like:
In every case, your provider needs to be signed up to the scheme to qualify. Also, you need to be making at least the £131.36 per week (average out over 3 months) if you’re over 25. Again, self-employed people with earnings that go up and down can still qualify. They can use an expected average for the current tax year if they need to. For disabled children, the scheme’s available up to the age of 16, with a maximum government contribution of £4,000 per child per year. Visit www.childcarechoices.gov.uk for more information and to see how to apply.
One thing to watch out for is that you can’t claim Tax-Free Childcare if you’re on Universal Credit. If you still qualify for older forms of childcare support (like Child Tax Credit or Childcare Vouchers), then you won’t be able to get Tax-Free Childcare on top. In some cases, you’ll be better off sticking with what you’re already getting, but it’s not always cut-and-dried. If you try to claim Tax-Free Childcare while you’re on tax credits, though, your tax credit claim will end.
You can apply for Tax-Free Childcare online.
If you’re a student, your college might have a Discretionary Learner Support scheme. You need to be at least 19 to qualify for this, and can use the money for things like childcare, accommodation, travel and course materials. What you can get depends mostly on where you’re studying. You can read more about this here.
If you’re studying full-time in higher education, you might be able to apply for a childcare grant. This is on top of whatever other student finance you have, and because it’s a grant you don’t need to pay it back. Your kids need to be under 15 to qualify, or under 17 if they have special educational needs. Find out more here.
If you’re under 20 yourself and studying, “care to learn” payments might be another option. If you qualify and are looking after a child, you could claim up to £160 a week per kid (or £175 if you’re in London). The cash is paid directly to your childcare provider for as long as your course lasts, or until your children no longer need childcare. Check here for more information.
The Childcare Voucher system used to let you take up to £55 a week of your wages in the form vouchers. The benefit of this was that you didn't pay any National Insurance or Income Tax on that portion of your earnings. The actual amount you could take this way was based on what you earned and when you signed up. When the new system came in, people already getting Childcare Vouchers had the option to stick with them. Anyone signing up after or changing to an employer that didn't support vouchers had to switch to the new system, though.
As for Child Tax Credit, that’s one of the older benefits being replaced with the Universal Credit system. That means most people can no longer sign up for it. There are a few exceptions, though, so it’s always worth checking where you stand and what your best options are.