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tinyacorns

Help with Childcare Costs

There are a range of ways you can make savings on your childcare costs. The three main ways are:

  • • Tax-free childcare
  • • Government Funding – 15 or 30 hours free childcare
  • • Salary Sacrifice and pay with voucher payments

Tax-free Childcare

Tax Free Childcare is a way of claiming a top-up benefit from the government for childcare costs. The HMRC website describes this benefit as follows:

Parents will be able to open a new childcare account. For every £8 a parent pays into their childcare account, the government will pay in an extra £2. Parents can get up to £2000 government support per child per year towards their childcare costs. They can then use this money to pay their childcare provider.

You're usually eligible if all of the following apply:

Your child:

  • • is under 12, or 17 if they're registered as having a disability
  • • usually lives with you

You (and your partner, if you have one):

  • • are 16 or over
  • • live or work in the UK
  • • are employed or self-employed
  • • are over 21 and earn on average at least £120 a week, unless in your first year of self-employment. Different rates apply if you're under 21 or an apprentice
  • • earn less than £100,000 a year each
  • • don't get other support with your childcare, including from a childcare voucher or salary sacrifice scheme

You may also be eligible if you have a partner and one of you gets any of the following benefits:

  • • Carers Allowance
  • • Employment and Support Allowance
  • • Incapacity Benefit
  • • Severe Disablement Benefit

You can read more here:

https://childcare-support.tax.service.gov.uk/par/app/eligibility

Government Funding

Tiny Acorns offers both the Universal 15 hours funding and the Extended funding which offers a further 15 hours for eligible families.

Access to the Extended funding has certain conditions. The term before your child is eligible, we will provide a full handout explaining how both types of funding work and how to access them. 

Salary Sacrifice and voucher payment - save tax and N.I.

If your employer operates a childcare voucher scheme, you can save National Insurance and Income Tax. By registering for your employer's scheme, up to £55 a week can be deducted from your salary and used to provide childcare vouchers for the same amount. This amount, which is deducted from your gross salary, is then exempt from National Insurance and Income Tax.