Covid-19 – How Childcare Schemes can help Parents Return to Work Skip to main content
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Covid-19 – How Childcare Schemes can help Parents Return to Work

The pandemic has had a significant impact on children’s schooling and care, with many parents today struggling to balance the care of their children, their education, and their own work commitments in the home environment.

With the lockdown beginning to ease, many parents will be under pressure to return to work, or if self-employed, to re-open their businesses. However, with most schools not fully open and grandparents still unable to help, many will have no other choice than to turn to professional childcare, and for a longer period than usual. With the Government encouraging nurseries, pre-schools and childminders to prepare for a return to work from 1st June, parents should therefore consider their options.

The need for social distancing practices will mean lower numbers per nursery or child minder, with the cost of childcare therefore likely to increase. However, since 2017 the Government has offered parents of under 12s a subsidy of up to £2,000 per year per child through the Tax-Free Childcare Account. Surprisingly, take-up up has been poor, with (HMRC statistics confirming that) only 205,000 of 1.3 million qualifying families having benefited.

Tax-Free Childcare Accounts enable parents to save up to £8,000 per annum per child and to receive a taxpayer funded 20% top up on their savings. This is in addition to the 30 hours of free childcare for 3-4-year olds. The Account can fund childcare with registered providers, which can include nurseries, childminders, nannies, after school clubs and holiday schemes.

To be eligible both parents, or partners of parents, must be in work and each typically earning £139.52 or more per week; self- employed individuals also qualify if their average profits are above these figures.

As a temporary measure, during the COVID-19 crisis, the minimum earnings requirement for the subsidy and the 30 hours of free childcare for 3-4-year olds has been eased until 31st August*.

Parents in receipt of Childcare Vouchers from an employer are ineligible, as are parents or partners who have income of £100,000 or more – although this restriction has been eased too for critical workers.

Kay Ingram, Director of Public Policy at national financial planning group LEBC said:

“With rising numbers of parents returning to work but unable to call on grandparents for childcare, more families could ease the financial burden of lockdown by taking advantage of this scheme, which for a two-child family could save up to £4,000 a year.

“Parents who usually earn above the threshold of £100,000 may have seen a dip in earnings this year during lockdown, so claiming taxpayer funded help with childcare will help meet what is likely to be a rising cost. They can review this on a tax year basis, and should their income exceed the threshold again, making additional pension savings would reduce the income which counts towards the eligibility criteria. Higher earning critical workers will also now be eligible for this scheme.

“Parents currently receiving Childcare Vouchers from an employer with children under age 12 may also benefit by swapping these for the Tax-Free Childcare Account, especially if they have a larger family, where the tax subsidy can be greater than with Vouchers.”