Mums and dads – it’s the final countdown. We are just weeks away from the summer holidays for kids in England and Wales, while in Scotland and Northern Ireland many children are already off.
And while that’s lovely news for little ones, figuring out childcare - and affording it - can be a real pressure on parents who work.
In fact, it’s a pressure that could be even worse this summer (sorry). The average place at a holiday club now costs £145 per week, according to the Coram Family and Childcare’s 16th annual survey, which is more than twice what parents typically pay for after-school club in term time.
Holiday club is now 5% higher than it was in 2019, according to the research, and that comes as parents are also struggling with rising energy bills, food prices, fuel costs and more.
Megan Jarvie, Head of Coram Family and Childcare, says: “Rising costs and falling availability means that they are facing a double squeeze as they search for childcare they can afford that meets their needs.
“Without action to make sure there is affordable out of school childcare for every child who needs it, we are at risk of seeing parents – and mothers in particular – struggle to keep working.”
Read more: How much does it cost to have a child?
So the news that you could save 20% on your childcare bills by signing up to the government’s Tax-Free Childcare scheme could make a real difference.
And, I promise, it is easy to claim. Just a few hoops to jump through when signing up and then you can save a fifth off your bills.
Watch: Duchess of Sussex insists helping working mothers with childcare costs is 'imperative'
Who is Tax-Free Childcare for?
This is a simple way to save some significant money. Families can get up to £2,000 a year per child, which rises to £4,000 for a child with disabilities and it is available up to the age of 11 (or 17 for children with additional needs).
It’s also open to freelancers as well as employees, unlike the previous Childcare Vouchers scheme.
Many parents assume it’s just for nursery or childminder bills but this help can also be available for holiday clubs, after school clubs and breakfast clubs.
At the moment, more than 384,000 families already get this tax break but that is a drop in the ocean compared to the number who could.
HMRC reckons that around 1.3 million families could be using it to bring down their bills, which means hundreds of thousands are paying more than they need to.
Many parents with hefty nursery and preschool bills might use Tax-Free Childcare but if you don’t have those regular bills then you may not have thought about using it to help with the cost of holiday clubs.
Get moving now to register and you could get a 20% discount in time for this year’s long holiday.
It’s easy to register – you can just search ‘Tax-Free Childcare’ on GOV.UK.
How does Tax-Free Childcare work?
When you sign up to Tax-Free Childcare you pay money for childcare into an online wallet and the state then tops it up. You can then use that topped-up online wallet to make payments to your provider each month.
The childcare provider you’re using also has to be signed up to the scheme but most mainstream clubs and nurseries will be.
For every £8 you pay, the government will add £2 up to a maximum of £500 every three months or £2,000 a year. What that’s doing is essentially refunding you the basic rate tax you have paid on the money you’re spending on childcare – which explains the scheme’s name.
So, if you pay £145 for a week’s summer club, the state could stump up £29 of that for you – potentially £174 over a six-week summer break for just one child.
Read more: 22 easy ways to save money
You can open an account at any point in the year and use it straight away. If you deposit money and don’t use it then it can be withdrawn, so you don’t lose the cash if you don’t use it – which was something people found with the old scheme of Childcare Vouchers.
This is money that’s better off in your pocket!
Is there anyone who shouldn’t use Tax-Free Childcare?
Right now, the labour market is very tight and so workers are in a strong position. That may mean that you’re able to ask your employer to be flexible and allow you to work around your childcare needs this summer.
That won’t be suitable for everyone but it’s something to consider if you do have a role that you can do from home or condense your days and free up a day for childcare.
You may also be able to share the burden with other parents by arranging play dates that let you work and your children have fun.
If those aren’t an option then before you sign up for Tax-Free Childcare, it’s worth seeing if you qualify for any other support.
For example, if you have a family income that’s less than around £40,000 a year then it’s worth working out if you are better off on Universal Credit, which can provide up to 85% of childcare costs.
There are some good online benefits calculators that can help you work out if you’d be better off on UC. Try websites like EntitledTo and Turn2Us for guidance.
Ultimately, times are tight and childcare costs can stop some people working, leaving them poorer in the longer term as well. So set aside a few minutes and get the help you are entitled to this summer!