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Help with childcare costs

Please see the following information on child tax credits and working tax credits and other help with childcare costs.

Child tax credit

Child tax credit is a benefit to help with the cost of raising a child. You may be able to receive it if you're over 16 and responsible for a child who is either:

  • Under 16; or
  • Under 20 and in full-time education or training.

You can't claim child tax credit if you're claiming universal credit.

You don't need to be working to claim child tax credit.

See the GOV.UK - child tax credit page for an overview of this benefit. There is also guidance on child tax credit available from the Money Advice Service website.

Working tax credit

Working tax credit is designed to top up your earnings if you work and you're on a low income.

You can't claim working tax credit if you already get universal credit.

Tax credits are tax-free and you don't have to be paying National Insurance or tax to qualify.

You could get working tax credit if either of the following apply:

  • You're aged from 16 to 24 and have a child or a qualifying disability; or
  • You're 25 or over, with or without children.

You must:

  • Work a certain number of hours a week;
  • Get paid for the work you do (or expect to); and
  • Have an income below a certain level.

The basic amount of working tax credit is up to £1,960 a year - you could get more (or less) depending on your circumstances and income.

See the GOV.UK - working tax credit page for an overview of this benefit. There is also guidance on working tax credit available from the Money Advice Service website.

Universal credit

Universal credit is a new type of benefit designed to support people who are on a low income or out of work. It will replace six existing benefits and is currently being rolled out across the UK. The new system is based on a single monthly payment, transferred directly into a bank account. At present universal credit only affects newly unemployed people in certain areas of the country.

Universal credit is a single monthly payment for people in or out of work, which merges together some of the benefits and tax credits that you might be getting now.

Universal credit will replace:

  • Income-based jobseeker's allowance
  • Income-related employment and support allowance
  • Income support
  • Child tax credit
  • Working tax credit
  • Housing benefit

See the GOV.UK - universal credit page for an overview of this benefit. There is also guidance on universal credit available from the Money Advice Service website.

Help from your employer

Payments from your employer to your registered or approved childcare provider are known as 'directly contracted childcare'.

Many employers offer their workers help to pay for childcare. This can include:

  • paying you cash to pay for childcare;
  • paying the childcare fees directly; or
  • paying the child's school fees.

If your employer offers any of these, you will be liable for tax and national insurance contributions. There are other types of childcare support your employer could provide however, without you having to pay tax or national insurance contributions. These are:

  • childcare vouchers;
  • directly contracted childcare; and
  • workplace nurseries.

See the GOV.UK - paying for childcare: getting help from your employer leaflet for more details. There is also guidance on help with childcare costs available from the Money Advice Service website.

Childcare vouchers

You can use these to pay your childcare provider, who will claim the value of the voucher from the voucher company or from your employer, usually by direct payment into their bank account. Some employers administer the scheme themselves; others use a voucher company to run the scheme. Many people receive their vouchers as an e-voucher but you can receive it as a paper voucher.

See the Childcare Voucher Providers Association childcare vouchers page for more details. The Family and Childcare Trust have also published this pdf icon help with childcare costs [1Mb] leaflet.

Tax-free childcare

A new scheme, called tax free childcare is available for parents to replace the existing employer voucher scheme. It will be rolled out in stages starting with the youngest children first. You can find out more information through the Childcare Choices and GOV.UK - Access childcare support through the childcare service websites.

The new scheme will be open to single parents / couples who work eight or more hours a week (including self-employed) and who pay for Ofsted-registered childcare for a child under the age of 12 (or 16 if the child is disabled).

Eligible families will get 20 per cent of their annual childcare costs paid for by the government up to a maximum of £2,000 per child. Maximum eligible costs are set at £10,000 per year per child.

Annual income limits in the new scheme are set at £2,420 up to £150,000 for a single parent, and from £4,840 up to £300,000 where both parents work.

See the GOV.UK - tax-free childcare: 10 things parents should know page for more details.

Care to learn

The care to learn scheme can help with childcare costs while you study.

You must be aged under 20 at the start of your course.

The scheme is available for publicly-funded courses in England. This includes courses in:

  • Schools;
  • Sixth forms in schools; and
  • Sixth form colleges.

See the GOV.UK - care to learn page for an overview of this benefit. There is also guidance on care to learn available from the Money Advice Service website.

Disability living allowance

Disability living allowance is a tax-free benefit for disabled children and adults to help with extra costs you may have because of your disability. If you claim for a disabled child, your child must need a lot more help or supervision than other children of the same age.

See the GOV.UK - disability living allowance page for more details.

If you need more information or help, contact the families information service helpline.

This page was last updated on 22 May 2017