Help with childcare costs

The cost of childcare can eat up a large chunk of the family budget. Help with childcare costs is available from the government and employers - from tax credits and tax-free childcare vouchers to free childcare.

Check what help you could get with childcare costs

Try the new childcare costs calculator on GOV.UK to estimate how much help you could get from the government for approved childcare.

Are you entitled to help with childcare costs?

Choosing the right childcare

Find the right childcare option for you with our guide to childcare options.

All three- and four-year-olds in the UK are entitled to some free early education or childcare.

How much you can get depends on which country you live in.

England

All three- and four-year-olds are entitled to 570 hours of free early education or childcare every year. Most people take this as 15 hours each week for 38 weeks.

Some two-year-olds are entitled to free early years education and childcare. Your child might be eligible if you claim certain benefits or if they have a disability.

You can use these free hours at Ofsted registered childcare providers, such as:

Find out more about free childcare and education in England

An additional 15 hours of free childcare for three- and four-year-olds is available nationally from September 2017.

Check with your childcare provider to see if they are offering the additional hours. Some councils are listing providers who offer the additional hours on their website.

Find out what free early education and childcare is available in your area on the GOV.UK website.

Those eligible will get a total of 30 hours for 38 weeks a year.

To be eligible for the additional 15 hours of free childcare:

  • Your child must be three or four when the scheme starts in your area.
  • Both parents must be working – or the sole parent must be working in a single parent family.
  • Each parent must earn on average at least the equivalent of 16 hours a week at the National Minimum Wage or National Living Wage.
  • Each parent must earn less than £100,000 a year.

You can now pre-register for the scheme on the GOV.UK website. You’ll be asked for your email address and your child’s date of birth, and you’ll receive information by email about when the scheme is available and how to apply.

Wales

Three- and four-year-olds can get 10 hours of free early education a week for 38 weeks a year, in a school or funded nursery.

If you live in a Flying Start area you might be able to get free part-time childcare for two-year-olds as well.

You can check if a childcare provider is approved or search for one through the Care and Social Services Inspectorate Wales.

From September 2017, a new childcare offer is being piloted by the Welsh Government. Under this new offer, three- and four-year-olds with working parents are entitled to 30 hours a week of free education and childcare for 48 weeks of the year.

Find out which areas are included in the pilot scheme on the Welsh government website.

Find out more about free early education in Wales from your local Family Information Service.

Scotland

All three- and four-year-olds can get 600 hours of free early learning and childcare every year.

This works out at around 16 hours every week for 38 weeks.

Some families with two-year-olds might also qualify if they receive certain benefits.

Find out more about free childcare and education in Scotland.

Northern Ireland

Children are entitled to at least 12.5 hours of free preschool education a week for 38 weeks in the year before they start Primary One.

Find out more about free preschool education in Northern Ireland.

Universal Credit

Universal Credit is a new benefit for people in and out of work, which replaces six existing benefits, including Working Tax Credit.

Working families who are eligible for Universal Credit can claim back up to 85% of their monthly childcare costs.

Who gets it?

Usually you and/or your partner will need to either:

  • be working (it doesn’t matter how many hours you or your partner work).
  • have a job offer.

How much is it?

The most you can get back is £646 a month for one child, and £1,108 a month for two or more children.

You can only claim if your childcare is provided by a government registered or approved childcare provider.

Find out more about Universal Credit.

Working Tax Credit – the childcare element

Child Tax Credit

When you apply for Working Tax Credit, you’ll be told if you’re also eligible for Child Tax Credit to help with the costs of bringing up a child.

Working Tax Credit is one of the benefits that is being gradually replaced by Universal Credit. You can’t claim Working Tax Credit and Universal Credit at the same time.

But you can continue to claim Working Tax Credit, or make a new claim for it, until you are asked to apply for Universal Credit.

What is the childcare element?

The ‘childcare element’ is one of the elements, or components, that make up Working Tax Credit.

If you’re eligible, it could cover up to 70% of your childcare costs.

Who gets it?

You can apply for the childcare element of Working Tax Credit if you:

Check out our guide on working tax credit for income thresholds.

How much is the childcare element?

With the childcare element, you can get help with up to 70% of your childcare costs.

The table below shows how much you could get in the 2017-18 tax year:

Number of children If you pay up to: You could get up to:
1 £175 a week £122.50 a week
2 or more £300 a week £210 a week

If you pay more than this for childcare, you will still only get the maximum amounts listed above.

If you qualify for the childcare element, you won’t necessarily get the full amounts.

How much you get will depend on:

  • Your income.
  • The hours you work.
  • Your childcare costs.

Find out more about Working Tax Credit.

Tax-free childcare

What is tax-free childcare?

Tax-free childcare is a new government scheme to help working parents with the cost of childcare.

You can use tax-free childcare at the same time as the 15 hours or 30 hours of free childcare for two- to four-year-olds.

You can’t use tax-free childcare at the same time as:

  • Childcare vouchers.
  • Universal Credit.
  • Tax credits.

Who can get it?

If you’re a working parent with children under 12 (or under 17 if they’re disabled) you can open an online account to pay for registered childcare.

You, and your partner if you have one, must both earn at least the equivalent of 16 hours at the National Minimum Wage or National Living Wage and each parent must earn less than £100,000 a year.

You can be employed or self-employed, and you may still be eligible if you (or your partner) are on maternity, paternity or adoption leave, or if you can’t work because you’re disabled or have caring responsibilities.

How much is it?

For every 80p you contribute to your online childcare account, the government will pay in 20p, up to a maximum of £2,000 per child per year (or £4,000 per disabled child per year).

So if you have one child, and you pay in £8,000 into your childcare account, the government will pay in £2,000.

It’s important to note that the government contributions are limited to £500 every 3 months (or £1,000 for a disabled child). So to get the maximum contribution you must contribute to your online account in every three-month period (or quarter) of the year.

How to apply

To apply online, or get an email alert when it’s time for you to apply, sign up to the Childcare Serviceon GOV.UK.

Find out more about the Tax-Free Childcare Scheme on GOV.UK or MoneySavingExpert.

Childcare vouchers

The government’s childcare voucher scheme is ending, and will be replaced by the new tax-free childcare scheme mentioned above. After April 2018, the childcare voucher scheme will be closed to new members but if you’re already getting childcare vouchers you can keep getting them as long as your employer continues to offer them.

Getting childcare vouchers may affect the amount of tax credits you can get. To find out whether you would be better off getting childcare vouchers, use the GOV.UK calculator.

What are childcare vouchers?

Childcare vouchers are a tax-free benefit offered by employers to their employees. The vouchers are deducted from your gross salary so you don’t pay tax or National Insurance on them. You can then use the vouchers to pay for any childcare that is Ofsted registered.

Who can get them?

You can use childcare vouchers to pay for childcare up until 1 September after your child’s 15th birthday (or 16th birthday if they are disabled).

How much can you get?

The amount you get depends on whether you pay Income Tax at the:

  • Basic rate (20%).
  • Higher rate (40%).
  • Additional rate (45%).

Each parent can get the following amounts in childcare vouchers without having to pay tax or National Insurance on them:

  • £243 a month (£55 a week) if you’re a basic rate taxpayer.
  • £124 a month (£28 a week) if you’re a higher rate taxpayer.
  • £110 a month (£25 a week) if you’re an additional rate taxpayer and you joined the childcare voucher scheme on or after 6 April 2011.

If you joined your employer’s childcare voucher scheme before 6 April 2011, you can get £243 a month regardless of whether you are a basic, higher or additional rate taxpayer.

Directly-contracted childcare support

Instead of offering childcare vouchers, your employer may choose to make a direct payment to a childcare provider, so that they can provide childcare to you.

This payment will be deducted from your pre-tax salary in the same way as a childcare voucher. You get the same tax-free amounts as you would if you were getting childcare vouchers.

After April 2018, when tax-free childcare is fully introduced, you won’t be able to start getting childcare vouchers or directly-contracted childcare.

If you’re already getting this support, you can continue to get it for as long as your current employer continues to offer it.

Find out more about direct contracted childcare on GOV.UK

Workplace nurseries

Some employers set up their own nursery, either at your place of work or at another location.

Your employer decides how much you pay for access to a workplace nursery.

But whether it’s free or subsidised, it counts as a tax-free perk of your job.

Speak to your employer to find out if they offer a workplace nursery.

Grandparents caring for grandchildren

If you’re a grandparent or other relative who is caring for children while their parents are at work, National Insurance credits are available to help you keep on building up your entitlement to State Pension during this time.

You’ll need 35 qualifying years to get the new full State Pension. You can check your National Insurance record on GOV.UK.

These National Insurance credits are called Specified Adult Childcare credits and you need to apply for them.

Find out more about Specified Adult Childcare credits and how to apply on GOV.UKopens in new window.

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