Child Benefits, tax credits and childcare
July 2010
There are government-initiated, financial benefits available to help with the costs of bringing up children. In some cases you may be able to use some of the money to save towards your children’s future.
Child Benefit
For many years some parents have thought it sensible to save or invest some of their Child Benefit allowance rather than spend it. It’s currently worth over £1,000 a year (2010/11) and runs for 16 years – longer if your child stays in higher education for example, and what’s more it is not means-tested.
The new coalition government has announced plans to freeze rates for three years from 2011-12.
You can claim Child Benefit for subsequent children too, although not quite as much as for the first child. Either way, if you were able to save it to put towards your child’s education, it could deliver quite a bonus when the time comes to use it.
Child tax credits
There is help for some childcare costs through the tax credit system for those families whose income is below a certain level. If you work, you may be eligible for additional financial help through the working tax credit system. You can find out more about this at the HM Revenue & Customs website.
For more information visit the Directgov website.
Or read our brief outline of the benefits in The basics - Child tax credits.
Free nursery places
All children aged three and four are entitled to up to six terms of free early education before reaching statutory school age (the first term following their fifth birthday). This is not means-tested and the minimum free entitlement for three and four year olds is 12.5 hours a week for 38 weeks a year.
To find out more contact your local education authority or visit:
Childcare vouchers
Very few people seem aware that employers can help with childcare costs through this very valuable benefit. Childcare vouchers can be paid to you regardless of your level of income as part of your total pay and are free of any personal tax and National Insurance contributions (NICs) – so they benefit you and the company. If your employer provides you with childcare vouchers, you will not have to pay tax or NICs on the first £55 per week, or £243 per month. However, if your vouchers are worth more than this, you will have to pay tax and NICs on the remainder.
The Government intends to restrict the tax relief on childcare provided by employers to basic rate tax only from April 2011.
Look at the sites below to find out more about resources and help towards the costs of pre school children’s learning:
Free early learning for three and four year olds
Directgov website
Working Tax Credit
Directgov website
