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- Parents on a low income or looking for work
- Parents who are working
- Parents who are studying
- Free childcare
If you are responsible for a child under the age of 16 and live in the UK, you will get a payment for each child you have regardless of your income. This will be tax-free unless you or your partner earns over £50,000.
Parents and carers on a low income or looking for work
Tax credits are income based state benefits that provide extra money to anyone responsible for children. There are two tax credits; you may be entitled to one or both of these.
Note: you can’t claim tax credits and Universal Credit at the same time.
- Take a short questionnaire to find out if you qualify.
- Use the tax credits calculator to see how much you could get.
Child Tax Credit
If you have a child under 16, you could claim Child Tax Credit. This won’t affect your Child Benefit. You can make a claim if you don’t live in a Universal Credit area or you have three children or more. Otherwise, you’ll need to apply for Universal Credit instead.
You can continue to receive CTC if your child is aged between 16 and 19 and staying on in full-time non-advanced education. You will need to inform HMRC to prevent the payment from being reduced or stopped.
Child Tax Credit is now limited to two children for children born from April 2017.
Working Tax Credit
If you can't work because you're caring for a child who is ill, or you are also on sick leave you may still be treated as working and be able to get WTC. This will depend on the length of time you're off work and what your usual working hours were before you went on leave.
It’s important to report any changes to your circumstances to the Tax Credit Office within 30 days or you risk being fined. Check which changes you must report.
To claim tax credits, call the Tax Credit Helpline on 0345 300 3900 and ask them for an application form or find out more on gov.uk.
Some benefits are being replaced by Universal Credit (UC). This is a single monthly payment made up of a basic standard allowance, with more money on top of this if you’re eligible for extra elements.
You'll get extra money for each child you have. However, this is limited to two children, unless you have special circumstances.
In return for these payments, whoever is specified as the 'lead carer' will need to take steps towards getting back into work depending on the age of your youngest child.
If you already work then UC could help cover up to 85% of childcare costs.
Parents who are working
This is an employee benefit that can save you around £1,000 a year in childcare expenses, as childcare vouchers are free from tax and National Insurance contributions.
You could get up to £55 a week from vouchers, depending on the rate of income tax you pay. The money will normally be taken out of your salary each month and will go directly to your registered childcare provider through an electronic payment scheme. If you are self-employed you can’t receive childcare vouchers.
Speak to your Human Resources department and find out if they run the scheme and who you need to contact (there are a number of companies that distribute the vouchers).
Childcare vouchers can affect the tax credits you receive. Find out if you will be better off taking childcare vouchers or not by using the Childcare vouchers: better off calculator.
If you are on sick or unpaid leave, your salary will continue to be adjusted by the value of your childcare vouchers. If your sick pay runs out or you are taking unpaid leave, you won’t be able to stay in the scheme. You can’t get childcare vouchers if it reduces your sick pay below the statutory rate.
Tax-free Childcare (TFC) scheme
TFC is a Government-backed voucher scheme which will eventually replace current childcare vouchers. It is currently being rolled out and will offer eligible families a 20% tax break on the first £10,000 of childcare costs for children under 12. This will provide savings of up to £2,000 per child each year.
The new scheme will only be open to some working parents – parents who are both working, or single parents. They must also be working a minimum of 16 hours per week and not be receiving tax credits.
Parents can continue to sign up for the current childcare vouchers through their employers until April 2018 and may be able to continue for as long as their employer runs the scheme. However, in some cases, the new scheme may offer higher savings so it may be worth switching to this one.
Unpaid time off (parental leave)
All parents are entitled to take up to 18 weeks of unpaid leave for each child until their 18th birthday (maximum four weeks per year). This leave must be taken in one week blocks unless your child qualifies for DLA in which case you can take shorter periods of time.
During this time, your employment rights will be protected.
Some employers will offer a better entitlement than the legal minimum, and trade unions have negotiated many workplace agreements for better leave arrangements than the statutory scheme, including paying for part or all of parental leave. Check your terms and conditions or consult with your union rep if you have one.
It's worth speaking to your employer to see if you can arrange extra leave – they don't have to pay you, but it may be that they do as part of your contract.
Shared parental leave (SPL)
Employed parents may be able to get SPL and Statutory Shared Parental Pay. If you are eligible to receive SPL, you can take it in up to three separate blocks and decide how much time you will take along with your partner.
If you have a child aged under six or a child who has a disability (cancer is classed as a disability) and is under 18, you have a legal right to ask your employer to negotiate a working pattern that helps you care for your child.
This could be especially important if you are continuing to work while your child is having treatment.
They don't have to agree to your request, but they do have to consider it seriously. You need to have worked for your employer for at least 26 weeks when you make your application, and you can only make one application a year.
Parents who are studying
Care to Learn
If you are a parent under the age of 20 and studying full or part-time, then you may be able to receive up to £160 (£175 in London) per child towards your childcare or travel costs with Care to Learn.
If you're living in England and studying full-time you may be eligible to receive the Childcare Grant. This could cover as much as 85% of your childcare costs during term time and holidays.
All children aged three to four in England are entitled to 15 hours of free early education or childcare a week, for 38 weeks of the year. Some two-year-olds are also eligible. This has to be spread over at least three days and is limited to term-time only.
From September 2017 you may be able to get 30 hours a week.
The new Childcare Choices website set up by HMRC gives more information about your choices and includes a calculator to compare your different options. You can also contact your local council to find out what Sure Start Children Centres are in your area and what free classes and playgroups are available.
Making other arrangements
If you're struggling to keep up with childcare payments, it could be worth looking at finding an alternative childcare arrangement that will save you money – even if it's only temporary.
Accepting help from friends and family could save you a lot of money and stress. By reducing nursery fees by just one day a week, you may be surprised by how much you will save on a monthly basis. You could also organise to share lifts to and from school to save on fuel costs.
- If your child is studying at college or university, see what support there is for continuing or taking a break
- Access benefits designed to support those with health conditions and their families
- Read more about budgeting, cutting down spending, borrowing safely and dealing with debt
Updated July 2017, next review due 2018.