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Monday 14th June 2021

73% of people who responded to our 2021 Childcare Survey were using Government assistance schemes with childcare. However, some respondents told us they didn’t know what is available to them or whether they were eligible for help.  Here we share useful resources to help you identify if you can get help with childcare costs.

What childcare options do I have? And, am I eligible?

Often you will know there is help available to you but you are unsure how to access it. Here we signpost Government resources that provide all the information you need about your childcare options and the financial help available to you.

  • The Childcare Choices website is where HMRC provide all the information you need to understand you options and eligibility for help with childcare costs
  • The Childcare Calculator provides an estimate of your entitlement to help with childcare costs

Here are some extra resources That HMRC have given up to share with you that may answer some of your questions:

‘Money towards childcare’ infographic

Click image to open full-size Money Towards Childcare infographic

Myth busting Q & A factsheet for tax free childcare

Click image to open Tax-Free Childcare Myth Busting factsheet

Childcare choices outside of England

The Childcare Choices website highlights the differences between the devolved nations and signpost you to relevant advice. However, if you are uncertain or you are overseas, we have further information on our dedicated childcare page.

Are you better off staying on the old Voucher Scheme or switching to tax free childcare?

HMRC have put together some fictional examples of comparisons between the old childcare voucher scheme and the tax free childcare offer. As an Armed Forces family you might have other factors to consider if you are considering switching, but these will help to illustrate the financial differences.

Note: unless otherwise stated, it is assumed that a year’s worth of childcare is 48 weeks.

Scenario 1: Family with children aged 2 and 6 years old.

David and Sarah have two children, Oliver aged 6 and Amelia aged 2. Sarah is employed and receives childcare vouchers through her work via salary sacrifice. David is self-employed.

  • Oliver goes full time to an afterschool club at £62.42 per week for 38 weeks a year and a holiday club for 6 weeks of the year (£973.32 total). His annual childcare costs are £3,345.28.
  • Amelia is full time at a nursery for 48 weeks a year (£255.47 a week) with an annual cost of £12,262.56.

For both children, this makes an annual total of £15,607.84.

As a higher rate taxpayer, Sarah receives a total of £1484 in tax exempt childcare vouchers per year, saving £623 in tax and NICs. David is self-employed so cannot receive tax exempt childcare vouchers via salary sacrifice.

On Tax-Free Childcare (TFC), David and Sarah receive the full £2000 top up (£500 a quarter) for Amelia’s care and £669 for Oliver’s care (per annum). Total top up is £2669

This family would be better off financially on TFC.

Scenario 2: Family with children aged 6 and 10 years old 

Tarun and Ameena have two girls (Gita and Heema) aged 6 and 10. Tarun receives vouchers via salary sacrifice. As a higher rate taxpayer, he receives £1484 in tax exempt childcare vouchers per year, saving £623 in tax and NICs. Ameena works as a hairdresser but her employer does not offer a childcare voucher scheme.  

Both Gita and Heema go to an afterschool club for 38 weeks of the year (£55.10 for Heema, £46.10 a week for Gita who receives a 15% sibling discount). They also attend a holiday club for 7 weeks of the year (£130 per week for Heema and £78 a week for Gita due to a 40% sibling discount).  

Their total childcare costs are £5301.60 annually. 

On TFC, Tarun and Ameena can receive a top up of £1060 or 20% of the total.  

This family would be better off financially on TFC. 

Scenario 3: Family with children aged 6, 3 and 1 years old  

Chris and Chee have 3 children: Grace, Ethan, and Alice, ages 1, 3 and 6 respectively. Chris is self-employed so is not able to receive tax exempt childcare vouchers via salary sacrifice and Chee is a basic rate taxpayer able to receive £2915 of tax-exempt childcare vouchers via salary sacrifice per year, saving £932 in tax and NICs.  

Grace and Ethan are both full time at nursery and Alice goes to an after-school club.  

  • A full-time nursery place for Grace costs £251.35 a week or £12,064 a year.
  • Ethan is 3 so benefits from the 30 hours scheme. For 38 weeks of the year, Chris and Chee only pay for 20 of the 50 hours he is in nursery but for the remaining 10, they have to pay full price. His care totals £6,139.84.
  • Alice goes to an after-school club for 38 weeks of the year (£53.83 a week) and goes to a holiday club for 7 weeks of the year at a price of £153.82 per week. Her care costs a total of £3,122.28.  

Total childcare costs per year for all three children are £21,326.12 a year.  

Using TFC, Chris and Chee can receive up to £3852 a year to help pay with childcare. This is equivalent to 20% of Ethan and Alice’s care and £2000 of Grace’s care.  

This family would be better off financially on TFC. 

Photo by Ben Wicks on Unsplash

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