As the cost of living crisis bites, households across the country are looking at ways how to save money. Soaring energy and prices means making precious money stretch that little bit further.
Childcare costs are likely to add to the list of outgoings, putting a further strain on already squeezed family budgets. A mum who started to research ways on how to lower her monthly childcare bill was left astounded by the ways she could save money.
As reported by Manchester Evening News, writer Dianne Bourne who is a full-time working mum discovered "to her utter horror" that she had been missing out on childcare discounts over the past five years. The discounts worth thousands of pounds could have made a big difference to Dianne's budget.
Dianne said: "I knew about the Government's 30 hours free childcare scheme and had used this with my older boy when he was at nursery. But the Government's Tax-Free Childcare scheme had completely passed me by - despite the fact I have been eligible to claim up to £2,000 a year off my childcare payments.
"Yes, I could have wept when I saw the amount of money I've been missing out on. But determined not to make the same mistake twice, I've now applied successfully for this scheme.
"I'm able to use it for discounts to the payments for my youngest child who attends nursery four days a week, as well as my older boy who attends after school club three days a week. And the good news is you continue using the system until your children turn 11."
Dianne explains: "It can be used to get 20 per cent of your money back (hence making it Tax-Free) for all different sorts of pre- and after-school clubs, childminders and nursery settings that you have to pay for until your children leave primary school. For me, using the Tax-Free Childcare equates to a massive saving as I currently pay over £800 a month for childcare for my two boys while I go to work."
According to government reports, around one million parents across the UK who qualify for the schemes are not currently using them. Dianne said: "There's clearly a lot of others out there like me who maybe didn't realise it applies to them - or haven't had chance to go through all the process.
Dianne feels parents don't know about these discounts and is on a mission to raise awareness of childcare discounts that could save families' money. She said: "I personally don't think parents are given enough advice about all of these different schemes and discounts that are available.
"In case it helps anyone else out there, here's some information to see if you can qualify for the different schemes and how I applied for it all. I have to be honest, it's not the easiest thing to have to apply for.
"If you do qualify successfully, you then have to re-confirm all your details every three months so you do have to be fairly organised about it all. You also have to set up and manage the payments yourself on the website for the Tax-Free Childcare so, again, it's a bit of a faff.
"But with costs rising so much everywhere, it's now a case of being worth the hassle for me - and I'm sure many other parents will feel the same way. When my youngest boy turns 3, I will then be able to apply for the Government's 30 hours free childcare scheme in England alongside the Tax-Free Childcare, which will bring childcare costs right down for me before he heads to school at 4."
The 30 hours scheme works in a different way. Here you apply for a unique code which you give to your childcare provider to apply the discount directly off your bill before you pay it.
Here are the ways Dianne discovered how to apply for both schemes to get some much needed help with childcare costs.
What is Tax Free Childcare?
Tax Free Childcare is a Government scheme which enables you to get up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare. This goes up to £1,000 every 3 months if a child is disabled (up to £4,000 a year).
If you successfully apply for Tax-Free Childcare, you’ll set up an online childcare account for your child. For every £8 you pay into this account from your own money, the government will pay in £2 to use to pay your provider.
You can get Tax-Free Childcare at the same time as 30 hours free childcare if you’re eligible for both. More on the 30 hours system if you read further down this article.
Check that you qualify
To qualify you need to be earning at least £152.50 a week, before tax, for the next three months. You or your partner's taxable income also needs to be below £100,000 for the next tax year.
If you're not currently working, you may still be eligible if your partner is working, and you get Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or contribution-based Employment and Support Allowance. You can also apply if you’re starting or re-starting work within the next 31 days.
You can start the process at the Government website here.
What can you use it for?
You can use it to pay for any of the approved childcare providers on the Government website. These include childminders, nurseries and nannies, as well as after school clubs and play schemes.
Your childcare provider must be signed up to the scheme before you can pay them from your Tax-Free Childcare Account. You can check if they're already signed up on there, and also there's a handy drop down menu to find the name of your nursery or provider once you've set up your account.
You will also get a unique code for each child you apply for. You can then give this code to your childcare provider so they know to expect a payment via the Tax-Free Childcare Account.
Setting up a Government Gateway Account
It says on the Government website that it takes five minutes, but it will probably feel like longer than this when you're doing it.
You will need to have to hand:
- your National Insurance number
- access to a mobile phone or landline
- details of one or more of the following - your UK Passport, tax credits, P60 or a recent payslip
You will also need to keep a safe record of the Gateway ID you get given, and you'll be asked to set a long password. You'll need to use these every time you log in in future too.
What happens next?
You will receive a message fairly swiftly via the website confirming whether or not you are approved for the account. Then you'll be ready to start paying your childcare provider through the account.
This bit is also rather fiddly as you'll need to work out how much you need to pay into your account each month for the Government to add on their 20 per cent. So for example, if your monthly nursery bill is £800, you would need to pay in £600, which the Government will then top up with £200 to £800.
But remember that for each child you can only claim up to a maximum £500 for every three months. If you claim that amount in full, that works out to £2,000 off your bills every year which is a big saving.
Re-confirming your details
As if it all wasn't fiddly enough, every three months you need to re-confirm your details or it won't stay up to date. They certainly don't make it easy to keep the discounts, which is why being super organised is key.
What about the 30 hours free childcare?
If you live in England and your child is aged between three and four years old you can apply for 30 hours free childcare alongside the Tax-Free Childcare scheme. There are different schemes that run in Scotland, Wales and Northern Ireland.
You can get 30 hours of free childcare per week for 38 weeks of the year (during school term time). You may be able to get free childcare for 52 weeks if you use fewer than 30 hours per week, but you will need to check with your childcare provider to find out if this is something they offer.
It is also important to note that it doesn't always cover the costs of meals, nappies and extras at your nursery, so it's always best to check with your provider. Your eligibility depends on if you are working, your income (and your partner’s income, if you have one), your child’s age and circumstances and your immigration status.
You can find out all the details and how to apply at the Government website here.
