Working Parents - Financial Assistance with Childcare Costs

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During this time of increasing financial pressures for families, many working parents are struggling with everyday costs, including Childcare Costs. Many working parents are unaware of government financial assistance with childcare costs e.g. Tax Free Childcare, Universal Credit, Working Tax Credit which will support working families to remain in work.

Family Support NI have produced this animation to give parents an overview of the types of financial help available and practical guidance about how to access it

Help with Childcare Cost and Financial Support Video

Most working families in Northern Ireland will be entitled to financial support with their registered childcare costs, although there are some exceptions. You can only receive help with childcare costs that are being paid to a registered or approved childcare provider.

There are different types of help towards these childcare costs, with support available to working parents through the benefits system, Government support schemes or tax relief. The best form of help will be determined by your circumstances, such as whether you are working or self-employed, in a couple or single, and how much your childcare costs are.

There are different criteria in place that you must meet to be eligible to apply for the different forms of help towards your childcare costs.

You should read the criteria for each scheme or benefit carefully, as they may be different, but the most common criteria to qualify may specify:

working a minimum number of hours
children not to be over a certain age
household income not to exceed a certain amount
childcare provider must be registered or approved

You may not be entitled to help towards your childcare costs if you are already accessing support,

and:

you have ‘not recourse to public funds’

you or your partner earn more than £100,000 per annum

The Main Forms of Support with the Cost of Childcare:

You can find more information on the main forms of support with the cost of childcare below:

Universal Credit

Universal Credit is a single monthly payment for people in or out of work, which merges together some of the old benefits and tax credits. Universal Credit has replaced income- based Job Seeker's Allowance, Income-related Employment Support Allowance, Income Support, Housing Benefit, Child Tax Credit and Working Tax Credit. If you are working, your Universal Credit payment can include an amount to help with the cost of childcare, equivalent to 85% of your registered childcare costs. However Universal Credit is a means tested benefit, so therefore the amount you receive each month will depend on various factors such as your income and any savings you may have, your outgoings on childcare and rent, the number of children you have an if there are any disabilities in the household.

Tax Free Childcare

Parents and carers could be eligible for Tax-Free Childcare if they:

have a child or children aged up to 11. They stop being eligible on 1 September after their 11th birthday. If their child is disabled, they may get up to £4,000 a year until 1 September after their 16th birthday
earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average
each earn no more than £100,000 per annum
do not receive tax credits, Universal Credit or childcare vouchers

Tax-Free Childcare is available to both employees and the self-employed

HMRC has produced a Tax-Free Childcare guide for parents, which explains the reasons and benefits for signing up to the scheme

Each eligible child requires their own Tax-Free Childcare account. If families have more than one eligible child, they will need to register an account for each child. The UK Government top-up is then applied to deposits made for each child, not household.

Account holders must confirm their details are up to date every 3 months to continue receiving the government top-up.

Childcare providers can also sign up for a childcare provider account via GOV.UK to receive payments from parents and carers via the scheme.

Working Tax Credit

Working Tax Credit is money provided to boost the income of working people who are on a low income and for eligible claimants can include an element towards your registered childcare costs. For new claimants this has now been replaced by Universal Credit

Childcare Vouchers

Childcare Vouchers are a scheme run through an employer’s payroll aimed at helping working parents with the cost of childcare. Parents ‘sacrifice’ part of their salary into the Childcare Voucher account and, as a result, save on their tax and National Insurance.

Childcare Vouchers are accepted by childcare providers across Northern Ireland and can be used to pay for all types of childcare as long as it is approved or registered.

This scheme was closed to new entrants on 4th October 2018, however, those that had already signed up prior to that date can continue to use it.

Parents who had joined the scheme before it closed, remain eligible provided they:

make at least one salary sacrifice into their Childcare Voucher account within each 52 week period
do not leave the scheme in order to use Tax-Free Childcare, and
do not change employer

Registered Childcare is beneficial for many reasons, including financial assistance with childcare costs. These are outlined in this short animation

Benefits of Registered Childcare Video