How do I get help with childcare costs?

posted by in Budgeting

Cutting the costs of childcare Sometimes finding affordable childcare can be difficult. No matter what you choose, it’s important that you plan early before you return to work as there are waiting lists for some services.

It’s also a good idea to look into what benefits are available to you so you don’t miss out on any entitlements.

According to government statistics, it will cost you over £200,000 to raise a child in the UK, a large chunk of this cost is for childcare when one, or both parents are working. With this in mind, is there help available and how do parents go about getting it?

Follow these simple steps to get help with childcare costs:

Step 1: Calculate how many hours of childcare you’ll need

Before you can work out your budget and plan your return to work, you’ll need to calculate how many hours of childcare you think you’ll need. To do this you’ll need to consider the following:

Request flexible working hours

What hours are you going to be working when you return? Do you want to go back on a full-time basis, or part-time?

If you’ve been with your employer for 26 weeks, you’re legally entitled to make a request for flexible working hours. You or your partner can both apply. This may help you reduce the amount of childcare you need.

There are a range of arrangements you can request from your employer including part-time hours, job sharing, flexitime, and working from home. Your employer must handle your request in a reasonable manner. Consult Acas or your trade union if you need help or believe your request has been treated unfairly.

Free childcare from family and friends

Is someone you know free to help out on a regular basis? Sometimes grandparents or trusted neighbours are happy to help out. While this may reduce your childcare costs, you should always:

  • Make sure that they are not left financially out of pocket, Ask them if they have enough money to feed an extra person. Offer to give them food, even if it’s canned goods from your cupboard they could use in a separate meal. Even if they say no, it’s the gesture that counts. You’ll need to make sure they’re kitted out with enough nappies, wipes, formula and spare clothes to get through the day.
  • Check that they’re physically fit enough to manage the responsibility. Looking after a child can be exhausting. This is especially true if they’re at toddler age and making the most of all that energy by running about the place (as we saw in this video of a South Korea expert and his family that recently went viral).
  • Consider drawing up a written agreement which sets out what each party expects from the arrangement. This may feel like an odd thing to do with family or friends, but it can help to avoid any misunderstandings
  • Check to see if they are eligible for benefits including the Grandparents Allowance
  • Make sure there’s no legal complications if they aren’t a blood relative

Depending on your working hours, a little support from grandparents or neighbours can help reduce your childcare needs significantly.

Splitting childcare with a colleague or friend

Can you share the childcare duties with a friend? If you both go back to work part-time it may be possible to share childcare responsibilities and reduce costs.

Before you consider this, there are some rules you have to bear in mind and you may both need to register as childcarers with Ofsted.

Step 2: Create a budget

Next, you’ll need to work out what your total household income and outgoings will be and create a monthly budget including your childcare fees.
Review your budget as a whole, and see if there are any ways to reduce your spending. If you’re worried that managing childcare costs may push you towards having a debt problem, use our online debt advice tool and get a recommendation on what to do next.

Step 3: Check your benefits entitlements

There are a range of benefits provided by the government to cover the costs of childcare when parents return to work. Use the childcare costs calculator to estimate how much you’ll get towards approved childcare costs such as a nursery, child-minder, or a home careworker.

Childcare element of working tax credit

The ‘childcare element’ is one of the elements of the Working Tax Credit and it can cover up to 70% of your childcare costs. Use the calculator to check your entitlement.

Universal credit

Universal credit is slowly being introduced and will eventually replace many current benefits. You may be entitled to claim back up to 85% of your childcare costs through Universal Credit.
You can apply for this benefit online. However, bear in mind that you can’t claim working tax credits at the same time.

Free early years childcare

All three and four-year-olds are entitled to some free early education or childcare. The entitlement varies across England, Wales and Scotland Find your nearest provider And see how much you can claim.

Childcare vouchers

Some employers allow their staff to purchase childcare vouchers. Contact your HR or payroll department to see if this is available.

Childcare voucher schemes can result in significant savings on childcare costs but this can affect the amount of working tax credits you get.Use the calculator to work out if you’re better off buying vouchers through your employer or not.

The current childcare voucher scheme is only open until April 2018, but as long as you’re signed up before then you can keep using it until your child is 15.

Tax-free childcare

This is a new scheme starting 28 April 2017 which replaces childcare vouchers. For every £8 you pay to an approved childcare provider, the Government pays a top-up of £2, up to a maximum of £2,000 per child each year.

Until April 2018, you have a choice of tax-free childcare or childcare vouchers. You can only use one of these options, and the amount you can save will vary depending on your situation. Complete this Government calculator to find out which will be best for you.

Workplace provisions

Some employers offer directly contracted childcare or workplace nurseries as part of their benefits package; you don’t have to pay Tax or National Insurance for these. However, if they give you:

  • Cash for childcare
  • Payment childcare fees
  • Payment for school fees

Then you will have to pay Tax and National Insurance for these.

Step 4: Review your budget

Once you’ve calculated your budget including all of your priority bills and entitlements you should have a final review.

Make sure you’ve included any ‘hidden’ costs such as travel costs to and from childcare, or food expenses and that you haven’t forgotten to claim any benefits. If you find that you don’t have enough coming in to cover all of these essential costs, then you should immediately seek debt advice.

With some planning and the right support getting back into work after having a baby can be a positive step, but only if it is affordable and the right choice for you and your baby.

Rebecca Drury is the latest addition to the MoneyAware team joining in November 2016, with a background in ecommerce and social media management. She enjoys live music, travel (especially trying local delicacies) and loves reading vintage sci-fi novels. She's an excellent dancer and loves researching money-saving tips.

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