Tax credits and other help with childcare costs

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You could get extra tax credits to help with the cost of childcare

Money Advice Service

Thinking about going back to work after having a baby? You could get extra tax credits to help with the cost of childcare. There’s also help available if you’re a single parent on benefits, or a student returning to your studies.

Tax credits

Did you know?

The average tax credit payout for childcare is more than £60 per week.

Source: MoneySavingExpert

 

 

It’s often said that the cost of childcare puts parents off returning to work. It’s true that childcare isn’t cheap. However, the childcare element of Working Tax Credit is designed to help cover some of the cost, so if you are eligible you’ll still normally gain by working.

It can be worth up to £122.50 a week (or £210 if you have more than one child). And you could be eligible whether you’re employed or self-employed.

Do you qualify for extra tax credits?

In most cases you have to work for 16 hours a week to qualify, and you must use registered or approved childcare. This can include childminders, playgroups, nurseries or someone who looks after a child in your home.

To find out what is classed as registered or approved childcare for tax credits, see the Gov.uk website

How much help can you get?

You can get help with up to 70% of your childcare costs, based on a maximum of £175 a week for one child or £300 a week if you have two or more children.

That works out as:

  • up to £122.50 a week for one child, or
  • up to £210 a week for two or more children

You won’t necessarily get the full £122.50 or £210 a week – the actual amount you get will depend on your income, the hours you work and your childcare costs. The lower your income, the more tax credits you can get.

Use the Tax credits calculator on the HM Revenue & Customs website to find out if you qualify and get a rough idea of how much you could be entitled to

Case study

“I’ve been wanting to go back to work for a while now, but it’s really expensive to put Tom into nursery for five days. Even four days, with Andy’s parents looking after him on Fridays, was going to cost a huge chunk of my salary. Because Andy earns a good wage, we didn’t think we’d be eligible for tax credits, but it turns out we are… almost £100 a week.” – Gayle

How to claim

If you’re new to tax credits you’ll need to get a claim form – just call the Tax Credit Helpline. They are also the people you’ll need to speak to if you’re already in the system and want to start claiming for help with childcare costs.

Contact the Tax Credit Helpline on 0345 300 3900

Tax credits and Universal Credit

You’ve probably heard about Universal Credit, the new benefit which is going to be replacing tax credits (and other benefits). It’s being introduced in stages over the next few years from April 2013 to October 2017 – so most people won’t be affected to start with.

Basically, Universal Credit will be paid as a single monthly payment that will include a standard allowance plus other ‘elements’ – for example for childcare. So the amount you get will depend on your circumstances.

If you’re already claiming tax credits for help with childcare costs, then the Tax Credit Office will tell you when you should claim Universal Credit instead.

If you’re claiming help for the first time you will be told whether to claim Universal Credit or tax credits.


Find out more in our guide Universal Credit – an introduction

Other help with childcare costs

If you’re a single parent returning to work after a period on benefits, you may qualify for help with childcare costs. You can find out more at your local Jobcentre Plus (or Jobs and Benefits Office in Northern Ireland).

Help with childcare costs for students

Just because you have children, it doesn’t mean you have to put your studies on hold. There is a surprising amount of childcare help available – everything from grants and vouchers to free crèche places.

Find out more about childcare and other grants available to student parents in Returning to study after having a baby

Contact the student support or welfare officer at your college or speak to a guidance teacher at school.

Depending on where you live, there are also a number of websites for student parents that explain what support is available to you.

This article is provided by the Money Advice Service.


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