Childcare

Saving on childcare

4little1s.com explores the costs associated, rights and way to save on childcare

The government is planning to announce shortly new maternity and paternity rights that will allow new and existing parents more flexibility around taking time of work when they really need it. Basically it allows mothers the ability to 'transfer' their last six months of their maternity leave over to the father, three months paid. The proposal is planned to be introduced in April 2011.

Clearly great news for new parents, especially as household costs will inevitable now start going up. However there is a flip side to this of course, what about the parents who have older children now and juggling the huge costs associated with childcare….read on for more information.

Tax considerations

80% of the cost associated with childcare (up to 16 years old, max £175.00 per week for one child and £300.00 per week for two or more) can be claimed as part of the childcare part of the working tax credit. This means that parents are able to claim £140 and £240 per week to help out with their childcare.

In order to qualify for this, mum and dad need to more than sixteen hours per week and their salaries must not be more than £40,000 per annum. Also stipulated is the fact that the childcare provider has to me on the Ofsted registered list, see the website payingforchildcare.org.uk for more information about this and a list of the childminders that are registered.

The money parents receive is agreed and fixed up front over a twelve month period, so make sure you think through some of the other costs associated that you might forget about such as school holidays. Then simply divide it by fifty two to get to the amount you should claim as your weekly amount. The Tax Credit Helpline people can be contacted on 0845 300 3900 and are very helpful.

Another area worth being aware of are something called Childcare vouchers, and are available from your employer that is if they run the scheme. You should ask them about it and if they don't, make sure you let them know that they can actually save money on NIC. Basically they work by allowing you to exchange up to £243.00 per month (pre tax) for tax and NI free vouchers that you can then use to then pay for childcare via:

- Registered childcarers
- Nannies
- Au pairs
- Crèches
- Nurseries
- Out of school clubs
- Holiday schemes

The equates to a benefit of almost £1200 per annum per parent for higher rate tax payers, or just over £900 per annum per parent for basic rate. Generally speaking you are better off with childcare vouchers if:

Childcare costs more than £175.00 a week (1) £300.00 (2 or more) or of your overall income for the house is over £35,000 per annum. Otherwise, opt for the WTC (Working Tax Credits). However, it's best to work it out carefully and per your own circumstances, as well as using the HMRC website to work it out. (hmrc.gov.uk)

Nanny Sharing

Employing a nanny is not a cheap affair, fulltime or part-time. However, there is another option where you share a nanny with other families in your area.
This approach can certainly be more cost effective and certainly worth exploring more. Clearly you should ensure you only deal with a reputable company and always follow up on references etc.

Finally, there are some other good websites out on the Internet that can provide additional help, advice and support on this matter such as:

- Netmums
- Mumsnet
- Emergencychildcare




4little1s.com is an online baby nursery, baby bedding and baby gifts retailer located at www.4little1s.com