Products You May Like
Parents are spending up to £1,300 annually on childcare costs, according to new research. On average, households have seen their costs rise £110 per month, with the typical nursery in London and the South East now charging around £300 a week. As a result, parents have opted into falling into debt to survive, but people can instead claim tax-free childcare which could save people thousands of pounds. The tax break is worth up to £500 every three months (up to £2,000 a year) per child. If a child is disabled, this rises to £1,000 every three months (up to £4,000 a year).
Some 21 percent of parents have cut down their working days due to soaring costs, according to Credit Karma.
On top of this, around seven percent have left the workforce entirely to look after their children themselves.
Akansha Nath, the head of Partnerships at Credit Karma, broke down what households should do to financially support themselves when it comes to childcare.
Mr Nath explained: “The cost of living crisis is a big one and it’s putting many consumers’ finances at risk, especially parents.
“While costs for childcare, utilities and other household bills remain outside of their control, there are things parents can do to better manage their money now.
“Take advantage of Government help and support schemes available this winter and have a conversation with lenders or utility providers if you’re struggling to keep up with your bills.
“They may be able to help avoid bills remaining unpaid, which can have a negative impact on your credit and thus, your finances, over the long term.”
Who is eligible for tax-free childcare?
Parents are able to apply for assistance through the Government which provides support with childcare costs via tax-free childcare.
This relief helps working families, as well as those who are self-employed, to pay childcare costs for childminders, nannies and after-school clubs, until their child is 11 years old.
The Government awards working parents with annual salaries up to £100,000 assistance worth £2 for every £8 they pay for childcare.
This can go up to a maximum of £2,000 per child per year which would pay for the substantial rise in childcare costs.
Households can get up to £500 every three months for each child and this figure goes up to £1,000 every three months (up to £4,000 a year) if that child is disabled.
Speaking to Express.co.uk, Rajan Lakhani, a money expert for smart savings app Plum, broke down why people should claim this tax relief.
He added: “With childcare costs in the UK among the highest in Europe, this is one tax break parents can’t afford to be missing out on.
“If you’re eligible for Universal Credit, you can also reclaim 85 percent of your childcare costs, worth up to £1,108 per month.
“The Government also offers 15 hours per week of free childcare for all three- and four-year-olds, rising to 30 hours for working families, and 15 hours for disadvantaged two-year-olds.”
Eligibility for this support is dependent on if the parents are working, their income, the age of the child and immigration status.
Those who are not working may be entitled to this tax assistance if their parents are working instead.
Furthermore, information on applying for tax-free childcare can be found on the Government’s website.