I’m a mum – how to save up to £2,000 a year on childcare

A SAVVY mum has shared how parents can save up to £2,000 a year on childcare costs.

The tip comes as HMRC estimates suggest that over one million families are missing out on childcare support every year.

The BudgetingMum said in her latest TikTok: "With childcare costs the bane of your life then you need to check whether you're eligible for tax-free childcare.

"Most people that are working are eligible so you need to have a look on the government website as it also includes nurseries and after-school clubs up until your child is 11."

With tax-free childcare parents, each earning no more than £100,000, with children 11 or under can claim up to £2,000 per child per year towards childcare costs.

But for parents of disabled children, it’s up to £4,000 per year and children qualify until they turn 17.

Parents of pre-schoolers can use tax-free childcare to pay for a registered childminder, nanny, play scheme, nursery, or club, school or home-care worker.

And parents with kids at school can use it to pay for after-school clubs, wraparound childcare and holiday clubs.

Applying takes about 20 minutes and you’ll need your National Insurance number and, if you’re self-employed, your Unique Taxpayer Reference (UTR) number.

Once accepted and on the scheme, you need to reconfirm your details every three months.

The BudgetingMum said: "I had two children under two and was forced to leave my full-time job as a Phlebotomist in the NHS due to the cost of childcare."

"Without tax-free childcare, I would have been left £30 a day out of pocket! So, it's so important for others to know how to save any money they can on childcare."

What is the tax-free childcare scheme?

All working parents with children who are 11 or under can apply for the Government's tax-free childcare scheme.

The initiative could save parents £2,000 a year on childcare costs.

This goes up to a maximum of £4,000 if your child is disabled.

The scheme essentially works like a savings account where for every £8 you save towards childcare costs, the government tops up an extra £2.

So if you put away £8,000 a year for one child, the government will give you £2,000 totally free.

The scheme was launched in 2017, but one in five families could still be missing out on the cash because they haven't applied.

HMRC figures show that over one million are eligible for the benefit but haven't used it.

Am I eligible?

Working parents need to earn at least the minimum wage, for the equivalent of 16 hours a week, to be eligible for tax-free childcare.

If you have a partner, they’ll need to expect to earn at least this much too.

Self-employed workers are also eligible, provided they earn this amount as well.

If you are self-employed and you don't expect to make enough profit in the next three months, you can use an average of how much you expect to make over the current tax year.

The earnings limit doesn't apply if you’re self-employed and started your business less than 12 months ago.

Both partners will also have to earn less than £100,000 a year to be eligible.

You and your partner cannot both have accounts for the same child.

You usually have to be working to claim tax-free childcare, but there are some exceptions.

Parents may still be eligible if one of you is working and the other gets Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or Employment and Support Allowance.

Before you apply for tax-free childcare, check if you even need to pay for childcare.

For example, parents of three and four-year-olds can apply for 30 hours of free childcare a week.

Is my child eligible?

Your child must be aged 11 or under and will usually need to live with you.

Each child stops being eligible on September 1 after their 11th birthday.

Adopted children are eligible, but foster children are not.

If your child is disabled you may get up to £4,000 a year until they’re 17.

To receive this, your child will need to:

• Get Disability Living Allowance, Personal Independence Payment or Armed Forces Independence Payment
• Be certified as blind or severely sight-impaired

How do I apply for tax-free childcare?

You can apply for the tax-free childcare scheme online via Gov.UK.

Before you apply, you need to have some important details handy first - this includes your National Insurance number and your Unique Taxpayer Reference if you're self-employed.

According to the Gov.UK website, it takes 20 minutes to apply.

Once you've applied, you can follow the government's step-by-step guide to login into your account.

To do so, you'll need the Government Gateway user ID and password you used when you applied for tax-free childcare.

How is the money paid?

Cash is added by the government directly into parents' childcare accounts.

You then need to spend this cash on a registered childcare provider.

Nearly 60,000 registered childcare providers are signed up, including nurseries, nannies, childminders and school clubs.

What other childcare help is available?

England, Scotland and Wales all have schemes which allow working families with children aged three and four to access 30 hours of childcare support or early-years education for 38 weeks per year (in some cases longer).

In England, you can apply for 30 hours childcare support when your child turns two years and 36 weeks, with a view to it starting when they are three.

To receive your 30 hours this coming school term, you need to set up a childcare account and apply by August 31

Applying takes about 20 minutes at the government website – you’ll need your National Insurance number – and you’ll have a decision on your eligibility within seven days.

Then you’ll receive a code to give to your childcare provider and the government will pay them directly.

After that, you simply have to reconfirm your details every three months.

If you’re working and claiming Universal Credit, you could be eligible for help to cover up to 85 per cent of your childcare costs with Ofsted-registered providers for children aged 0-16 – that’s up to a monthly amount of £646.35 for one child and £1,108.04 per month for two or more children.

You can claim 30 Hours Childcare Support as well as Universal Credit childcare support to pay for any additional hours used if required.

Log on to your Universal Credit account or speak to your work coach for more information. Eligibility criteria apply.