Debt and money related letters: what to do and how to respond
An official-looking letter drops on to the welcome mat. It looks decidedly...
The big events in life keep getting more and more expensive. Owning a house, getting married, travelling the world, having kids, even learning to drive and owning a car is becoming too expensive.
Most people would consider a house to be the biggest expense you’ll ever have, but recent figures have shown that childcare costs are similar to the average annual UK mortgage payment (which was estimated at £7,207 in 2012).
This, along with the statistic that it costs an average of £227,000 to raise a child could be enough to put anyone off having kids…but as we all know, it doesn’t!
Clearly it didn’t put me off! I have a little one who goes to nursery twice a week and apart from the stress of settling him in (he’s a stubborn one!), there’s also the financial worry of affording the fees while on a part-time salary.
It seems my worries are not unfounded; the latest figures show that childcare costs have soared by 77% over the past decade, leading to 500,000 mothers being priced out of the workplace.
With this in mind, I’ve compiled a list of things to consider when choosing a childcare provider to make sure it minimises the impact on your ever-diminishing funds.
If you’re pregnant or planning a baby, read our blogpost for information on maternity benefits. Don’t let the dreaded ‘baby-brain’ get in your way – let us help you plan your finances!
Once your baby arrives you’ll receive child benefit – £20.50 per week for your first child and £13.55 for each subsequent child, provided that you earn less than £50,000 after tax. If you or your partner earns more than £50,000 after tax, you can either stop claiming child benefit or you’ll need to pay more tax.
If you’re working you may be entitled to working tax credit. You may also be eligible to claim extra child tax credits, which can help towards the fees if you’re working and using registered childcare. You could get up to 70% of the childcare costs you’re claiming for, up to a maximum of £175 a week for 1 child and £300 a week for 2 or more children.
If you receive tax credits, you’re pregnant or you have a baby under one you’re entitled to free prescriptions and dental treatment as well. All children are eligible too.
It’s really true that every little helps, so it’s important to make sure you’re getting all the benefits you’re entitled to. You can use our quick and easy benefits checker to find out what you can claim and how to go about it.
There’s a government scheme which your employer can join called childcare vouchers. These allow you to pay for childcare before tax. It might not sound like it will make a difference but it can save you £1,000s a year in tax. Speak to your employer to find out if they take part and make sure you choose a childcare provider that accepts them too.
This HMRC calculator will help you to work out whether you’ll be better off using the vouchers or not. You don’t have to pay tax or National Insurance contributions if your employer provides directly contracted childcare or a workplace nursery.
There are also other forms of help available if you’re studying, including childcare grants.
And from September 2015, 1.9 million working families will also get the chance to benefit from a childcare subsidy worth up to £2,000 per child (details are to be confirmed).
All three- and four-year-olds in England are entitled to free early education. They receive 15 hours each week for 38 weeks of the year, so without wishing the time away I’m counting down to my boy’s third birthday!
If you’re on certain benefits and meet the criteria, some two-year-olds are also eligible. The rules are changing from September 2014 to include more free places for two-year-olds so get in touch with your local council to find out about free early education in your area.
If you’re already getting all the help that’s available and you’re worried about debt, you can use our 60 second debt check. It’ll take a quick look at your situation and you’ll receive straightforward advice based on your circumstances.