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The new tax-free childcare system – what you need to know

This week’s Spring budget saw the government confirm its action to help reduce the living costs for families with the introduction of the new tax-free childcare system and an increase in free childcare, up from 15 to 30 hours.

But is the package all that it seems? Not everyone will benefit under the new system and the free childcare hours may not be feasible say some nurseries.

The finer details are yet to be released, but this is what we know.


What is the new tax-free childcare deal?

Working families with children under age 12 will get £2,000 a year for each child to help with childcare costs.

For every 80p the parents pays for the childcare, the government will pay 20p – essentially giving back the 20% tax workers pay on their earnings.


Can I still have childcare vouchers?

The new system will replace the existing childcare voucher scheme, which has been seen as unfair as they are reliant on employers providing them.

The new scheme means the self-employed can also take advantage of some help towards the cost of childcare.

The childcare voucher scheme will be closed to new entrants from April 2018, but you can continue using them if you are an existing member. Some people may find that are better-off with the childcare voucher system, so if your employer provides them, it is a good idea to opt in so that you can weigh your options at a later stage.

You can’t be part of both schemes.


Who can use the tax-free childcare scheme?

The scheme will be available to all working parents, including those who are self-employed. Both parents must be working, but you will still be eligible if you are temporarily out of work, such as maternity leave for example.

You must be earning at least £115 a week and no more than £100,000 a year, although you can have a combined income of over £100,000.


Will I be better-off?

If you earn over £100,000 then the scheme is closed to you, in which case you can continue with childcare vouchers if your employer still provides them.

The new scheme is open for children up to age 12, , or up to £4,000 for children up to the age of 17 with a disability, so if you have an older child, up to age 16, then the childcare vouchers will be a good option to help towards childcare costs, such as after school clubs.

Some families may be able to make better savings using childcare vouchers, depending on their pay and the cost of childcare.

Whether you are better-off under the new scheme depends on various factors such on your earnings, how much your childcare costs are, whether you both work, age of your children and how many you have.

There are no national insurance savings under the new system, so you could be worse-off if you have low childcare costs.


If your employer is still offering you childcare vouchers, sign up now to keep your options open.


How can I apply?

You can apply for the new scheme from next month, starting with your youngest child. You will have to open an online account, provided by NS&I and made available via

You then pay into this account, which is topped up by the government.

You can open one account per child with deposits of up to £8,000, which will be rewarded with the maximum contribution from the government of £2,000.


Free childcare

From September 2017, parents of three and four year olds will be able to claim 30 hours free childcare, which currently stands at 15 hours.

But, it is unclear how feasible this is, as nurseries have already spoken out about the inability to accommodate the demand for places.

Private nurseries, aimed at working parents, in particular may not be able to accommodate this, which means parents who do want to go back to work will face further obstacles.


The government is expected to release further details of the new childcare system soon.


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Reduce your grocery bill by 70% this summer!

The kids are off school and they are going to be hungry – inevitably, the next few weeks will see the cost of your weekly shop shoot up.

To help families keep the costs of food shopping down, MMM put Approved Food to the test, which can help slash the cost of shopping by as much as 70%.

There is of course one catch – the food is past or close to its sell-by date, but perfectly safe.

With a £30 budget, MMM managed to bag a fair amount – cereals, tinned food, sweets and treats, drinks and even laundry detergent and dishwasher tablets – the sort of things where you can generally ignore the date stamped on the product.

If you’ve tried reducing the cost of the grub by switching brands or shopping at discount stores but think you can do better, then try Approved Food  – you’ll be surprised at just how much you could save on some store cupboard essentials.

New products are available everyday and there are some real bargains. For example, Sprite Zero 330ml for just 29p or a 2kg Reeses Peanut jar for just £2.99. There’s even stuff for pets, at more than 50% off.

MMM was really pleased with service and surprised at just how at just how much £30 would buy (see pic above/ instagram).

Although we would like to see Approved Food cut down on the cardboard packaging, the items arrived well packed and in excellent condition.

So, if you’re looking to save a few more pounds on your groceries, take a look at Approved food – you’ll be surprised at just how good the bargains are.


Keep up with MMM on Twitter @MumMoneyMatters and Facebook !


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