Childcare can really eat into your family budget. In this blog, we explore the benefits of tax-free childcare.
Childcare is a huge part of family life, but if you find that costs are getting more and more expensive, it may be time to look at other options. If you haven’t looked into tax-free childcare, you may be missing out on potential savings.
Don’t be wary of using any childcare funding options available to you, as they may help ease the strain of juggling work and family commitments. Tax-free childcare is a government initiative that allows you to claim up to £500 every three months towards the costs of childcare.
Are you eligible?
The requirements for tax-free childcare if you and your partner are earning at least minimum wage and working for 16 hours a week or more.
If you’re self-employed and started your business less than a year ago, there isn’t a limit to your earnings.
You can’t claim if:
- Your child doesn’t live with you
- if you or your partner has a taxable income of £100,000 or over
- if you have tax credits, Universal Credit or childcare vouchers.
If you’re unsure on what you can claim, use the government childcare calculator here.
How does it work?
If you’re eligible, the money gets paid into an online account. It can be used towards any regulated childcare, such as after-school clubs, nurseries and childminders. For every £8 you spend, the government will pay £2.
Other ways to save
If your child is three or four years of age, you may also be entitled to 30 hours free childcare alongside your tax-free childcare. More than 325,000 parents have been successful in applying for 30 free hours of childcare through the government scheme.
You can apply for 30 free hours childcare alongside tax-free childcare on the Childcare Choices website.
If you’re not considered eligible for 30 free hours, you can still claim the 15 hours childcare that are free to everyone. You can even split the hours you’re entitled to between different childcare providers.