With the increase in employers encouraging staff to return to the office, a survey has found that parents of nursery and primary school-age children are facing an increase in childcare costs. This often leads to other family members, such as grandparents, acting as free babysitters.
In order to tackle the cost of childcare, the UK Government is gradually increasing the level of free childcare that they will provide.
Currently eligible working parents are entitled to 30 hours free childcare per week, during term-time, for children aged 3 to 4.
From April 2024 this will be extended to working parents with children aged 2, who will be entitled to 15 hours of free childcare per week. To be eligible you must be earning between £8,760 and £100,000 per year.
If you are a couple, you must both be working and you must both earn between £8,760 and £100,000 per year each. This is based on your adjusted net income and therefore, if your earnings exceed £100,000 you may be able to make a pension contribution to bring your adjusted net income to below this limit.
The funded hours can be used with any childcare provider that has signed up to the scheme. Not all childcare providers will offer the new funded hours so you will need to check this.
You can now apply for this on the UK Government website. You will need to get a code for the funded hours to give to your childcare provider. For children already aged two you must claim your code before 31st March 2024.
The next stage will be introduced in September 2024 at which point, working parents of children aged 9 months or more will be entitled to 15 hours of free childcare per week.
The final stage will be in September 2025 when working parents of children aged 9 months or more will be entitled to 30 hours of free childcare per week.
Depending on the childcare provider, these hours can be used over 38 weeks of the year, or up to 52 weeks if fewer hours are used each week.
These new measures will help take the pressure off family members providing informal childcare for parents who wish to return to work but could not previously afford the cost of formal childcare services.
If you would like more information on the new free childcare measures being introduced in April, please contact your Financial Planner at Informed Choice.
