Are you claiming all the childcare help you're entitled to?

The new Tax Free Childcare scheme could leave you quids in.
The new Tax Free Childcare scheme could leave you quids in.
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Parents take note: There’s a new kid on the block that could mean up to £2,000 to help towards childcare costs.

The Tax Free Childcare scheme launches this month, and is to be gradually rolled out to everyone across the year.

Yet with a range of childcare help already out there, you need to ensure you’re picking the right one. Thankfully figuring that out isn’t too difficult.

First, see if you’re due free childcare, if not, go for free cash towards it, if not, grab a scheme that effectively discounts the cost.

So I’m going to take you through it in that order, rather than just focus on the changes.

When I’m talking about childcare, the definition for this purpose is specifically Ofsted (or equivalent in the rest of the UK) registered nurseries, nannies, childminders, after-school clubs, or summer school (even if that’s all they go to).

For full information see www.mse.me/childcarecosts.

Here’s a quick rundown.

1. Are you eligible for what will be up to 30 hours a week of FREE childcare?

Currently, in England for at least 38 weeks a year everyone with a three or four-year-old (or two year old if you’ve low income), is entitled to 15 hours a week of free state or private nursery childcare.

From September 2017, this will increase to 30 hours a week, but only if you earn at least £115 a week (if a couple both parents must) but neither parent earns over £100,000 a year.

Similar schemes, but with variations on hours, are available across the UK.

2. Paying for childcare? Are you eligible for childcare tax credits (free cash).

If you pay for childcare, for a child up to age 15, and are a single parent working 16+ hours a week, or a couple BOTH working 16+ hours a week, with total household income under £40,000, you should definitely check if you’re entitled to childcare tax credits.

Now let me be very clear, this doesn’t mean you will be eligible – it’s far too com-plex to say that – just that it’s worth calling the tax credit hotline on 0345 300 3900 to check.

Tax credits are just a cash payment into your bank account, and they can be big, with typical payouts around £3,000 a year.

It’s worth noting that technically the real name of childcare tax credit is the ‘childcare element of working tax credit’ (totally different to child tax credits).

If you’re entitled to childcare tax credits, then go for it, as it’s free cash, unlike the two schemes below which are discounts.

If you get tax credits you’re not then allowed to get Tax Free Childcare and while you can get childcare vouchers, doing that may reduce your tax credits, so isn’t worth it.

3. Discounted childcare via vouchers – but sign up soon.

The Childcare Vouchers scheme is run via employers, and you can only do it if your employer offers it – thankfully many do, especially bigger firms.

What usually happens is your employer will let you trade in salary for vouchers. For example, a basic-rate taxpayer can swap £1,000 of salary, which after tax and national insurance is only £700ish in your pay packet, for £1,000 in childcare vouchers.

You can then use them to pay for childcare. So you’re up £300 per £1,000.

Full help on this at www.mse.me/childvouchers.

Any parent can do this, but vouchers are gradually being phased out due to the launch of the Tax Free Childcare.

If you’re not part of a scheme by April 2018, you won’t be able to sign up after, so don’t miss out.

Even if you don’t need the vouchers, just get a very small amount to start, then you can increase it later.

* Martin Lewis is the Founder and Chair of MoneySavingExpert.com. To join the 12 million people who get his free Money Tips weekly email, go to www.moneysavingexpert.com/latesttip