Reduce your Childcare Costs

There are lots of different ways of reducing the cost of childcare but it can be confusing to know where you stand. York Family Information Service (YorkFIS) provide free and impartial information on the different options for parents and carers. We've collected together some of the main ways of reducing your childcare costs and also where you can find more information.

Daycare Trust - Paying for Childcare Website

The Daycare Trust is a national charity working for families to get high quality and affordable childcare. They have a fantastic website that has loads of information on all the different ways of reducing your childcare bill .

Working Tax Credit – Childcare element

Working tax is an in-work tax credit for families and includes a part which is designed to help with the costs of registered or approved childcare for working parents

• Each parent must work at least 16 hrs per week i.e. lone parent or both members of a couple
• For couples, both partners must work 16 hours or more per week or one partner must work 16 hours or more per week if the other is incapacitated, in hospital or in prison
• Up to 80% of eligible (registered or approved) childcare may be paid.
• There is a limit on the costs of childcare of £175 for one child and £300 for two or more children.

You can get your own online estimate of how much support you could get by using the Inland Revenue website .For more information about the Tax Credits contact the Tax Credits Helpline on 0845 300 3900.

Early Education – 3 and 4 Year Old Funding

All families are entitled to up to 15 hours of "early education" for 38 weeks of the year from the term after their child turns three. It is simple to take up and can make a massive difference to your bill. For more information see the Early Education Section.

Childcare Vouchers and Salary Sacrifice

Many employers support their staff with their childcare needs, including providing financial assistance. The most common way is where you can buy up to £55 a week of childcare vouchers directly from your pay. The part of your earnings you get in a voucher is free from tax and National Insurance.

Parents cannot claim help from tax credits for the childcare costs already being paid for by support provided by their employer. For example if you are using £55 of childcare vouchers a week you could only claim Working Tax Credits on the childcare payments over that £55 starting point.

Because of this some parents on a lower income may be better off using tax credits. As a general guide your family will be generally be better off accepting childcare vouchers in return for a salary sacrifice if:

• Your childcare costs are more than £175 pw if you have one child or £300 p/w if you two or more children
• You pay tax at the higher rate of 40%
• You are receiving tax credits at the family element £545 per year (or £1090 if you have a baby aged under one) and you are claiming for your childcare costs.

Other ways to reduce your bill

These are just some of the most common ways of reducing your childcare bill. To find out about more contact York Family Information Service who can talk you through what else might be available.