Paying For Childcare

Help available

Tax Credits

The childcare element of the working tax credit is designed to help parents and carers with the costs of childcare.

Working Tax Credit is an in-work tax credit for families, and includes an element to support the costs of registered or approved childcare for working parents.

To qualify for support, the childcare must be:

Registered childminders, nurseries, play schemes or out of school clubs
Schemes run by schools or other establishments that are exempt from registration
Providers of childcare for children aged 8 or over, who are approved by accredited organisations
Approved home carers

To apply for the childcare element of Working Tax Credit:

Lone parents must work at least 16 hours a week
Both members of a couple must work 16 hours a week or more
Or 1 member of a couple must work 16 hours a week or more and the other member must be incapacitated

The childcare element will pay up to 80% of eligible childcare costs up to a maximum of:

£140 (80% of £175) per week for 1 child; and
£240 (80% of £300) per week for 2 or more children

It should be noted that this is the maximum you can receive. The actual amount depends on your income.

You can get an indication to whether you qualify for this credit and how much you would receive by completing the Inland Revenue's online form. Alternatively you can contact the Family Information Service and we will arrange for a quote to be sent to you.

For more advice you can contact the Inland Revenue's tax credit's information helpline on 0845 300 3900. This is available from 8am - 10pm daily.

New Deal for Lone Parents

If you are a lone parent/carer bringing up a child and you are receiving income support you could join New Deal for Lone Parents, a government programme to help you decide if now is the time to return to work or training. They can advise you on the following:

Advice on benefits, jobs and training
Help with working out how much you need to earn to be better off, help finding out about childcare and help with childcare costs while you train or attend job interviews

For more advice and information telephone 0845 606 2626.

Students and adults attending vocational training In Barking and Dagenham the Adult College, Barking College and University of East London all offer subsided crèche facilities. In addition to this many courses aimed at helping you to enter employment or develop your career also provide assistance with childcare costs.

You should talk to your student welfare adviser or course tutor to see what assistance can be offered. The Early Years and Childcare Service also provides financial assistance to day care providers to enable them to release staff to attend courses listed in the Partnership training manual.

Nursery Education Funding

3 and 4 year old children can access Nursery Education Funding. This government funding provides 2½ hours of free early education for up to 5 days per week for 38 weeks each year.

How can employers help?

If you are employed, your employer may be able to help with the cost of your childcare.

Your employer could pay towards your childcare by either adding to you salary, or more commonly, operating a salary sacrifice scheme.

Using a salary sacrifice scheme would mean that you agree to give up part of your salary in return for payment towards childcare. This does have benefits for both you and your employer.

From April 2006 the first £55 per week on these schemes will be free of tax and national insurance contributions (your employer gets to pay a reduced amount of employer national insurance contribution).

This allowance is per employee, so if both parents were on one of these schemes you could get £110 per week of childcare payments free of tax and national insurance.

The employer would pay this either in the form of childcare vouchers or as a direct payment to a registered childcare setting. Childcare vouchers are widely accepted by registered childcare settings, particularly nurseries and childminders. However Pre School playgroups will probably not accept them.

There is a possible down side to salary sacrifice schemes. Depending on your employer's policies, you may be paying less to both your pension and national insurance. This could effect your long term pension arrangements.

Not all employers will operate salary sacrifice schemes, so check with them what is available. Where they do operate such schemes they will be able to tell you the benefits and draw backs of the scheme.

Childcare Affordability Programme

The London Development Agency is coordinating funding from central government for a scheme covering all London boroughs relating to childcare. This scheme is aimed at subsidising full day care and flexible childcare places in London for 0-5 year olds. In our borough only the flexible option is available.

A guide to child tax credit and working tax credit PDF 292K