Childcare costs are one of the biggest expenses families face, and many of my clients tell me they’re not sure what help is actually available. To make things clearer, here’s a simple guide to the main childcare support options in the UK, whether you’re employed, self-employed, or somewhere in between.
1. Childcare Vouchers – Closed to New Applicants
- What they are: Salary sacrifice schemes offered by employers. You exchanged part of your salary for childcare vouchers, saving tax and National Insurance.
- Who can use them now: These schemes closed to new applicants in October 2018. If you joined before then and your employer still offers the scheme, you can continue using it.
- Key point: If you’re already in the voucher scheme, it may still be beneficial – but you cannot newly join.
2. Tax-Free Childcare – The Current Main Scheme
What it is: For every £8 you pay into your childcare account, the government tops it up with £2 (up to £2,000 per child per year, or £4,000 if your child has a disability).
Eligibility:
- Available to both employed and self-employed parents.
- Each parent needs to earn at least £167 per week (equivalent to 16 hours at National Minimum Wage) but less than £100,000 per year.
- Children must be under 12 (or under 17 if disabled).
How to access: Apply online via the HMRC Childcare Service website.
3. Free Childcare Hours (England)
- Ages 3–4: Most families get 15 hours per week of free childcare during term time. Working parents may qualify for 30 hours per week.
- Ages 2: From April 2024, working parents of 2-year-olds can access 15 hours of free childcare, and this will extend to younger children in stages.
- Scotland, Wales, Northern Ireland: Similar but slightly different rules apply – check your local authority’s website.
4. Universal Credit Childcare Support
- Who it’s for: Parents on lower incomes who receive Universal Credit.
- How it works: You can claim back up to 85% of childcare costs, capped monthly per child.
- Payment method: You usually pay the provider upfront and then claim the costs back.
5. Which Option is Best?
- If you’re still in a childcare voucher scheme, it may be worth keeping it, but compare with Tax-Free Childcare.
- If you’re self-employed, vouchers aren’t available – but Tax-Free Childcare is designed to cover you.
- For families with younger children, keep an eye on the phased expansion of free hours.
- For lower income households, Universal Credit support can be more valuable than Tax-Free Childcare.
Final Thoughts
Childcare support can feel confusing, especially with different rules for employed and self-employed parents. The right option for you depends on your income, work situation, and your child’s age.
If you’d like a personalised review of which scheme could save your family the most money, I’d be happy to go through it with you.
Get in touch and let’s make sure you’re not missing out on valuable support.