Working parents will be aware that the cost of childcare can be extremely costly. The March 2023 Spring Budget announced some much-needed additional support. However, the new hours on offer will only be given to parents who are ‘eligible’ – see definition below.
Currently, families with children aged 3 and 4 are entitled to 15 hours of free childcare per week, whether they are both working or not. Working parents can claim an additional 15 hours if they are eligible. This will continue to be the case for children aged 3 and 4. There are some circumstances where parents with a child aged 2 also qualify for the 15 hours and this mainly applies to those in receipt of benefits.
Support is being extended to eligible parents with children over the age of 9 months up until they start school. The aim is to get more parents back to work, which will help grow the economy.
The changes are being phased in from April 2024 through to September 2025, at which stage all children from 9 months old will be entitled to 30 hours of free childcare, provided their parents meet the eligibility criteria:
April 2024 15 hours of free childcare for 2-year-olds
September 2024 15 hours from the age of nine months
September 2025 30 hours for all children under the age of five
In addition, further funding is to be provided to local authorities during 2024 to enable more schools to provide wraparound care – care before and after school. The hope is that by September 2026, most primary schools will be able to offer wraparound care, so that parents of school-age children can access childcare in their local area from 8am – 6pm.
To be eligible for the 15 hours, parents must currently earn an average of at least £1,976 over a 3-month period. This amount is based on the national minimum wage for 16 hours per week. However, you do not need to work a certain number of hours per week or per month – it is how much you earn that counts. In addition to this, the taxable income of each parent/carer must not exceed £100,000.
The above conditions apply to each parent/carer/partner in the household with whom the child mainly resides, which means one of them may not necessarily be the child’s parent, but they still need to satisfy the criteria.
Total hours per year
The government provide free childcare for only 38 weeks per year (the school year) not 52. If you are entitled to 15 hours a week this equates to 570 hours per year and for 30 hours a week it equates to 1,140 hours a year. Therefore, you may wish to ask your childcare provider if they can apportion the free hours more equally over the year.
When does it apply from?
The free hours are given from the start of the term after your child reaches the appropriate age, which will be either 1 January, 1 April, or 1 September. You should apply several months ahead because you need to be in receipt of an eligibility code before the start date. Not registering on time may make the start date later.
How will this affect childcare providers?
The Government have announced that from September 2023 they will be doing the following to assist childcare providers:
- increasing the hourly funding rate paid to childcare providers from £5.29 to £5.62 for 3 to 4 years olds and from £6.00 to £7.95 for 2-year-olds.
- allowing the staff-to-child ratio to increase from 1 to 4 to 1 to 5. The government say this is comparable with other countries, including Scotland, and follows extensive safety consultations.
What childcare support is available for people on Universal Credit?
For parents in receipt of Universal Credit, the maximum monthly support towards childcare costs will increase from £646 to £951 for those with one child and from £1,108 to £1,630 for two or more. A portion of this will now be paid up-front rather than paid in arrears.
Tax free childcare
The tax-free childcare scheme can be used in addition to free childcare hours. It enables you to pay up to £8,000 per year in an account which must be used specifically to pay for regulated childcare (this includes childminders, before/after school clubs and holiday clubs). The government will contribute £2 for every £8 you pay in, with the maximum contribution being £2,000 pa. Eligibility is similar to that for childcare hours, except you cannot also be in receipt of childcare vouchers, universal credit, or tax credits. It is available to eligible parents of all children from age 0 to age 11 (or 16 if they have a disability).
Where you live
The above applies if you live in England and further guidance can be found here:
If you live in Scotland or Wales, the support may differ slightly so check the relevant government guidance: