School holidays: how to get help with your childcare costs

From Tax-Free Childcare to Universal Credit, the Government has many schemes offering parents some financial help over the summer months.

As many parents know, the summer holidays can be an incredibly testing time financially.

It’s not just those day trips to the zoo though.

Not everyone is able to take large chunks of time off work over the school holidays, so often parents need to use of some form of childcare.

And while grandparents can be a useful budget choice, they aren’t always an option either.

So what support is available for parents to help with the costs of childcare over the lengthy summer break?

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Tax-Free Childcare

The Tax-Free Childcare scheme allows parents to get a top up from the Government on the money they put towards their kids’ childcare schemes.

Unfortunately, some parents may not realise their cash for regulated holiday clubs over the summer break can then be topped up by the Government.

This is paid through an online childcare account you set up for your child.

For every £8 paid to an eligible childcare provider, the Government will add a further £2, up to a maximum of £2,000 a year. 

You can use it to pay for a range of approved childcare, including summer clubs, which could cover everything from arts and crafts to sports.

To be eligible for the Tax-Free Childcare scheme, you’ll need to be earning at least the National Living Wage or Minimum Wage, but less than £100,000 a year.

If you’re out of work and receiving certain benefits such as Incapacity Benefit or Carer’s Allowance, but your partner is working, then you may still be eligible.

But you can’t get Tax-Free Childcare at the same time as claiming Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers.

The child will need to be 11 or under and usually living with you.

Adopted children are eligible, but foster children aren’t. If the child is disabled, you may qualify for up to £4,000 a year until they are 17.

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Childcare vouchers

An additional perk offered by plenty of employers is the opportunity to cash in part of your pre-tax salary in exchange for childcare vouchers.

Unfortunately, the schemes are now closed to new joiners ‒ you will need to have registered before October last year.

As long as your employer continues offering the scheme and you don’t switch jobs, you can keep sacrificing some of your income for childcare vouchers.

As the salary sacrifice comes out of your gross monthly salary, it reduces the amount that you pay tax on, meaning you save a few quid in Income Tax and National Insurance.

The vouchers are accepted by a host of summer camps, as well as nurseries and childminders.

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Free childcare

Parents of young children are entitled to a certain amount of free childcare per week.

All families in England are entitled to 15 hours of free childcare or early education for children aged three or four, while some families with two-year olds may also be eligible.

While this is based on only claiming it for 38 weeks (the school year, minus holidays), some providers will allow you to ‘stretch’ it over a full year by reducing the number of hours claimed each week.

Working families are entitled to up to 30 hours of free childcare, again over 38 weeks, which can be stretched to cover a year with fewer weekly hours. 

As with Tax-Free childcare, for the 30 hours of free childcare you’ll need to be earning at least the National Living Wage or Minimum Wage, but no more than £100,000 a year.

It can run alongside the Tax-Free Childcare scheme and childcare vouchers.

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Tax credits and Universal Credit

The childcare element of Working Tax Credit is for parents who work at least 16 hours a week and will cover the cost of up to 70% of what they pay in childcare.

This means parents receive up to a maximum of £175 per week for one child or £300 per week for two or more kids. It applies to children aged up to 16 (rising to 17 for those that are disabled).

It’s being phased out though, and replaced with Universal Credit, which can be used to claim back up to 85% of eligible childcare costs for children under 17.

You can get up to £646 a month for one child, or £1,108 for two or more children.

While you may be able to claim back a larger portion of the childcare, the hard cap works out as less generous than the tax credit system.

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