Paying for childcare
Information on the benefits, schemes and allowances that may help towards your childcare costs. Also find: links to calculators to work out how much you may save and who to speak to for further help.
Is your child 2, 3 or 4 years old?
All 3 to 4-year-olds in England and some 2 year olds can receive 570 hours of Funded Childcare per year (usually taken as 15 hours each week for 38 weeks of the year). For more information see:
There are currently three types of childcare support that your employer could provide which qualify for Income Tax and National Insurance contributions (NICs) exemptions.
1) Childcare Vouchers
Childcare Vouchers are offered by some employers to help employees with childcare costs. This is known as a Salary Sacrifice Scheme run by your employer or the voucher company. On 4 October 2018, childcare voucher schemes closed to new applicants. You may be able to get Tax-Free Childcare instead. You can use these vouchers to pay your Ofsted registered childcare provider. The savings you get depend on your tax band. Some popular childcare voucher providers your employer may use include:
If you are already receiving tax credits and want to know whether you would be better off with childcare vouchers, this online calculator will compare the options.
You can keep getting vouchers if you’ve joined a scheme and your wages have been adjusted before the scheme closed in October 2018, as long as:
- you stay with the same employer and they continue to run the scheme
- you do not take an unpaid career break of longer than a year
2) Directly Contracted Childcare
Directly Contracted Childcare is where your employer arranges with a commercial childcare provider to provide childcare to you. Your employer may provide emergency childcare cover or pay for a place:
- in a nursery
- in a crèche
- in a playscheme
- in an after school club
- with a registered childcare provider or other approved childcarer
3) Workplace Nurseries
If certain conditions are met, the childcare support provided by your employer is either partly or completely exempt from Income. If the conditions are not met your employer may help you pay for your childcare in other ways such as:
- paying you cash to pay for childcare
- paying the childcare bill
- paying the child’s school fees
For these options will have to pay the full amount of Income Tax and NICs (National Insurance Contributions).
Tax-Free Childcare allows parents to pay into an online childcare account and receive a government top-up. The funds in the account can then be used to pay for registered childcare providers who have signed up to the scheme. Our Tax-Free Childcare Explained page has more information on the scheme including timeframes, eligibility and the conditions of use.
Working Tax Credit (WTC) is for people who are employed or self-employed (either on their own or in a partnership).
Do I qualify for Working Tax Credit (WTC)?
To qualify for WTC your joint working hours will need to be at least 24 hours per week. This will mean:
- your joint weekly hours must be at least 24, with one of you working at least 16 hours.
- If only one of you work, that person must be working at least 24 hours a week.
You will still qualify for WTC if:
- one of you is over 60 and works 16 hours or more
- one of you qualify for the disability element and works 16 hours or more
- one of you is ill, an inpatient in hospital or in prison.
To find out more:
The Tax Credits Calculator will work out how much in Working Tax Credit (WTC) you could receive.
Further advice on tax credits can be found on GOV.UK or by calling Tax Credit Helpline on: 0345 300 3900 (textphone 0345 300 3909).
Childcare provided by a relative of the child, in the child's own home does not class as qualifying childcare. This includes relatives by blood, half-blood, marriage or civil partnership who are registered or approved childcare providers. For these purposes a relative means a:
- step parent
- foster parent
- aunt or uncle
- brother or sister
Childcare provided by relatives can be qualifying childcare if all the following circumstances apply:
- the relative is a registered or approved childcare provider
- the care is provided away from the child's own home
- the care is provided to nonrelated children in addition to the related child or children
Specified Adult Childcare credits
Specified Adult Childcare credits can transfer National Insurance (NI) credits from a parent or main carer, to a grandparent, or other family member caring for a child under 12.
If you are a parent who is in education then the following schemes may help you to cover you childcare costs:
Discretionary Learner Support
If you’re 20 or over and on a further education course you may be able to get Discretionary Learner Support to pay for your childcare. Each college has its own scheme so contact your college for more information
If you’re in full-time higher education and have a child under 15 years of age or under 17 if they have special needs then you can apply for a Childcare Grant to pay for your childcare costs
Care to Learn
If you’re under 20 and caring for your own child you may be eligible for Care to Learn. Payments go direct to your childcare provider to pay for childcare costs.
Help paying for childcare (GOV.UK)
Universal Credit and childcare (GOV.UK)
Financial help if you have children (GOV.UK)
A guide to the different childcare options available and things to consider
Many working-age grandmothers and fathers could qualify for Class 3 National Insurance credits for looking after children aged under 12, which can be used to top up their income in retirement.