Bringing Down the Cost
... of Bringing Up a Family
Creating living humans from raw materials is a time-consuming and messy business. It takes over a decade to get one up and running to an acceptable level, and there are heaps of costs, setbacks and frustrations involved. If you were to ask an experienced parent, they’d probably even tell you it’s the most important and complex thing they’ve ever done. Despite all that, a surprising number of have-a-go types still decide to give it a try each year. In fact, many even have several miniature humans on the go at once, in various stages of development. Given that the family fad doesn’t look like it’ll be dying out any time soon, it’s worth putting some thought into lowering the costs as much as possible.
Back in the old days, you used to be able to claim Child Tax Credit up until your human-in-progress turned 16 – or even 20 if they were going on to certain types of full-time education or training. These days, though, almost everyone will be making claims under the newer Tax-Free Childcare system. If you qualify, you can get 3-monthly payments of up to £500 per child you have who’s 11 or under – to a maximum of £2,000 a year each.
Of course, things are never quite that simple with schemes like this. For one thing, the government isn’t just going to hand you free money without you doing anything. You need to set up a specialised online account, for one thing. After that, for every £8 you spend on approved childcare costs the government pays £2 into your account – basically wiping out the 20% basic rate of tax on what you’re spending.
Tax-Free Childcare counts for things like:
In every case, your provider needs to be signed up to the scheme to qualify. Also, you need to be making at least the National Minimum Wage or Living Wage for an average of 16 hours a week over the next 3 months. Self-employed people with earnings that go up and down can still qualify, though. They can use an expected average for the current tax year if they need to.
For disabled children, the scheme’s available up to the age of 16, with a maximum government contribution of £4,000 per child per year. Visit www.childcarechoices.gov.uk for more information and to see how to apply.
On top of Tax-Free Childcare, you may also qualify for up to 30 hours of free childcare per year if your mini-human’s 3-4 years old. Again, this needs to be with an approved childcare provider, and you’ll still have to pay for extra stuff like meals, nappies and so on. You can claim a maximum of 1,140 hours per year if you qualify – which mostly boils down to you and any partner being:
If you’re on Universal Credit, up to 85% of your childcare costs can be claimed back through the system. You’ve still got to pay up-front and provide evidence of what you’ve spent, though.
A lot of parents end up relying on family to help out with childcare, and the government’s pretty keen to encourage that. Grandparents or other relatives who take care of children under 12 can claim Class 3 National Insurance credits for their trouble. It’s called the Specified Adult Childcare Scheme, and it’s designed to help out people who have to scale back their jobs to do look after children. It’s been around since 2011, and it makes things a lot easier when you're offloading the kids onto family members for a few hours so you can work yourself. It basically just means that granddad doesn't lose out on his State Pension entitlement down the line. It doesn’t sound like much actual cash, but it’s a lot better than a hole in your National Insurance contribution history.
So that’s the low-down on raising small humans, with a little help from the government. Talk to RIFT about keeping the taxman’s fingers out of your family finances, and check back here for more Voices from the RIFT…