Bringing up a family is expensive, so it makes sense to claim all your financial entitlements. Here’s what to look out for
There’s no doubt about it, babies are expensive. A survey commissioned by insurers LV in 2016 found that in a child’s first year, parents will spend £11,498, rising to £63,224 between one and four. Given these costs, it’s essential you take advantage of all the financial entitlements on offer.
This is a regular benefit paid by the government to help with the cost of bringing up your family. Although Child Benefit used to be paid for every child in the UK, it’s now dependent on income so if you or your partner earn more than £50,000 a year, you can still receive it – but you will have to pay a tax charge.
You’ll receive £20.70 a week tax-free for your first child, with each additional one getting £13.70 a week. It’s payable until children reach age 16, or 20 if they stay in certain types of education or training.
To claim Child Benefit, complete form CH2 which can be downloaded from the government site and send it off with your baby’s birth certificate.
Child Tax Credit
This is another benefit designed to help with the cost of raising your family.
Whether you can get it depends on your circumstances but, as a rough guide, if your household income is less than £16,105, you’ll be entitled to the full credit.
If you’re eligible, you’ll receive a basic amount – known as the family element – of up to £545 a year, followed by up to £2,780 a year for each child you have.
Higher family incomes – up to £25,000 for one child and £35,000 for two children – qualify for a smaller proportion of this tax credit.
Even if your family income is close to the maximum levels, it’s worth checking your eligibility on the government’s tax credits calculator.
It’s worth noting that the way Child Tax Credit works is changing from 6 April 2017. From this date, most people will only get the child element of Child Tax Credit for up to two children, however you can still claim it for more than two children if they were born before 6 April 2017. From the same date, you will also only get the family element of Child Tax Credit if you’re responsible for a child or children born before that date.
Working Tax Credit
You can claim Working Tax Credit to top up your income – as long as you work a minimum number of hours a week. For a single parent, you’ll need to be working at least 16 hours a week, while a couple with a child will usually need to be putting in at least 24 hours a week between you, with one of you doing at least 16 hours.
The amount you receive depends on your circumstances. For example, the basic amount is £1,960 a year. This is then topped up with extra payments, such as up to £2,010 a year if you’re a parent, and up to £810 if you work at least 30 hours a week. There’s also a payment to help with the cost of childcare, giving you up to £122.50 a week for one child or £210 for two or more.
As well as meeting a set number of working hours, your eligibility also depends on your income. As a rough guide, you might receive some Working Tax Credit if you have one child and your annual household income is less than £45,000 or £60,000 with two kids.
Again, try using the government’s tax credits calculator to check if you’re eligible.
Universal Tax Credit
Child Tax Credit and Working Tax Credit are among the benefits gradually being phased out. They are being replaced with Universal Credit, which rolls all sorts of benefits into one and is for those on a low income or out of work. At the moment you can only claim Universal Tax Credits if you are single person over 18 or a couple or family living in certain areas where Universal Tax Credit has already been rolled out.
The amount of Universal Credit you can get depends on your circumstances and income. The payment is made up of a basic ‘standard allowance’ and any extra amounts that apply to you. For example if you are in a couple and either of you are 25 or over you will receive a basic amount of £498.89 a month plus an extra £277.08 a month for your first child and £231.67 per child for your second and other children. You may also be able to claim back up to 85% of your childcare costs if you’re eligible for Universal Credit – this equates to £646 a month for one child and £1,108 for two or more children.
You can’t claim tax credits (child tax credit or working tax credit) and Universal Credit at the same time.
You can find out more or check if Universal Tax Credits are available in your area on the government’s website.
With all those coughs, colds and other illnesses that children can pick up, it’s good to know you won’t have to pay for prescriptions until your little one is 16 years old (or 18 if in full-time education). On top of that, your child can also get free NHS eye tests and dental treatment.
And you’re not forgotten either – maternity benefits include free NHS dental treatments and prescriptions for mum while pregnant and for 12 months after the expected date of your baby’s birth. If you haven’t already got a Maternity Exemption Certificate, you can apply for one. Ask your midwife, GP or health visitor for the application form FW8.
Once your little one reaches her third birthday, she’ll be offered free childcare and education. The government provides every child with 570 hours of free childcare or early education, which is usually taken as 15 hours a week for 38 weeks of the year. In some circumstances free childcare is available for 2 year olds.
Your local council can provide details of what’s available in your area.
Use the government’s search tool for more information.
If you or your partner are employed, you could be entitled to childcare vouchers from your employer. These are a government-approved tax-efficient way to pay for childcare. If you join the scheme you could exchange up to £55 a week (£243 a month) of your gross salary for vouchers to pay for registered childcare providers. The part of your salary exchanged for childcare vouchers is tax-free and exempt from National Insurance so you could make a saving of up to £933 per parent, per year. Both parents can claim the vouchers which means you could save up to £1,866 a year between you.
It’s possible to use them to pay for a variety of childcare up until your child is 16. All registered childcare providers can accept childcare vouchers as a method of payment including nurseries, childminders, nannies, au pairs, breakfast and after-school clubs and holiday clubs. If you do decide to enrol in the scheme it could affect the amount of tax credits you get. To find out if you would be better off taking the childcare vouchers or sticking with tax credits, use the government’s better off calculator.
Free school meals
It’s a bit further down the line but kids in reception to year two in England or in primary one to three in Scotland are entitled to free school meals. This happens automatically so you won’t need to do anything to get this freebie. In Wales and Northern Ireland, you qualify for free school meals if your family is receiving certain benefits. That’s one less thing to worry about when you wave them off to school.
Figures are correct as of February 2017.