paying for childcare
What can you realistically afford? The cost of childcare varies considerably depending on the type you choose, availability in your area, your geographical location and the age of your child. It may seem expensive, and childcare costs can account for a large part of the family budget, but where the safety and well-being of your child is concerned, it is worth choosing the best you can afford.
You will need to work out the cost of your preferred choice of care and how much you can afford each month, taking into account what financial help you are entitled to.
tax credits
Nine out of 10 families are eligible for some financial assistance through the new Child Tax Credit and Working Tax Credit. The amount you receive will depend on your circumstances.
Families with children can claim Child Tax Credit if their income is no more than £58,175 a year (up to £66,350 if you have a child under one).The amount you get depends on various things, including your annual income and is paid directly into the bank of the main carer.
The other tax credit you may be entitled to, if either you or your partner is working, is called Working Tax Credit. It includes a childcare element to help families who are working and spending money on childcare.
childcare vouchers
Childcare Vouchers is a scheme some employers offer to help working parents save on registered childcare costs. Childcare vouchers are not means tested and are available to all working parents whose companies operate childcare voucher schemes. The vouchers can be used to pay for all types of registered childcare including registered childminders, day nurseries, crèches, playgroups, out of school hours clubs, holiday play schemes and home childcarers approved under the new Home Childcarer Approval Scheme.
Your entitlement to tax credits, however, is likely to be affected. This is because you can only claim help through the childcare element of Working Tax Credit on childcare costs that you meet yourself. If your employer meets any of your childcare costs, even if your pay has reduced in return (a salary sacrifice) these costs do not count.
