Help with the costs of childcare
Families can access help with the costs of childcare in a variety of ways, through the tax credits system, vouchers provided by employers and the recently introduced tax free childcare accounts. Further details on all the options are available on the childcare choices website.
Families cannot receive Tax Free Childcare at the same time as Childcare Vouchers, Universal Credit or Working Tax Credit. You can use the government's Childcare Calculator to find out which option would be better for you, this will depend on your family circumstances.
All of the support is restricted to paying for childcare services that are registered. In Scotland, registered childcare means:
- a childcare provider registered by the Care Inspectorate.
- childcare provided in the child's home by, or introduced through, a childcare agency, sitter service or nanny agency which is registered by the Care Inspectorate.
Tax Free Childcare Accounts
The government introduced tax free childcare accounts to allow more families to access support with childcare costs. The accounts are for working families, including the self-employed, who have children under 12 (or under 17 if disabled). For every £8 the family pays in to the child's account, the government will add an extra £2, up to £2,000 per child per year or £4,000 for a disabled child.
The scheme was phased in from April 2017 starting with younger children and is now available to families who have children under the age of 12. More information is available from the UK Government website.
Tax Credits for childcare
If you are entitled to Working Tax Credit, and you and any partner are working at least 16 hours a week each, you can claim back up to 70% of your eligible childcare costs for children under 16 (or under 17 for disabled children). Depending on your income, you could get up to £122.50 a week for one child or £210 for two or more children. More information on Child Tax Credit is available on the UK Government website.
Universal Credit for childcare
If you, and any partner, are working, or you're due to start work, and you're claiming Universal Credit, you can claim back up to 85% of your eligible childcare costs for children under 16. You could get up to £646 a month for one child, or £1,108 for two or more children.
Universal Credit is being phased in over the next few years. It will replace a number of existing benefits, including tax credits. Whether you can claim will depend on where you live and your personal circumstances.
If your employer offers childcare vouchers or arranges your childcare, you can get up to £933 a year in tax and National Insurance savings.
The amount you can get in childcare vouchers depends on how much you earn and when you joined the scheme. You pay for your childcare before tax and National Insurance deductions are made.
If you are eligible for tax credits, taking childcare vouchers from your employer may affect the amount of tax credits you get. This calculator can help you decide whether you would be better off taking childcare vouchers Childcare Vouchers better off calculator.