New support package could save you £4,882 a year – check if you qualify | Personal Finance | Finance

Parents can now apply for free childcare hours for nine-month-olds, potentially an average of almost £3,500 a year.

Parents living in inner are due to make the highest average saving of £4,882 a year.

Laura Suter, director of personal finance at AJ Bell, commented: “Parents will receive the next tranche of Government-free childcare hours from September, providing a helpful boost to their finances.

“The extension means that parents of children as young as nine months old will be able to claim 15 hours of free childcare at a nursery or childminder, and they can now apply for this.”

Ms Suted noted: “But it’s tricky for parents to work out exactly how much they will save by using the Government handout.”

Based on average nursery costs, Ms Suter said: “Parents will save almost £3,500 a year on their fees thanks to the Government boost. This is based on parents being eligible for the full 15 hours for term-time only – amounting to 38 weeks of the year.”

The full list of average annual savings that 15 hours of free childcare can provide across the country based on AJ Bell’s calculations includes:

  • England – average – £3,478
  • Inner London – £4,882
  • Outer London – £4,053
  • South East – £3,800
  • East of England – £3,717
  • South West – £3,497
  • North West – £3,276
  • West Midlands – £3,067
  • North East – £3,058
  • Yorkshire and The Humber – £3,053
  • East Midlands – £2,855.

How does free childcare work?

From September, parents can claim 15 hours a week for children from nine months and older, but until then the free hours are available for two-year-olds and older.

If a person’s child is three or four, they could be entitled to 30 hours of free childcare.

Ms Suter said: “To be eligible, both parents have to be working and earning at least £183 a week each. However, parents of two-year-olds and younger lose all their free hour entitlement when either of them earns more than £100,000 (minus any pension contributions).”

For parents of three and four-year-olds, the free hours entitlement drops from 30 hours a week to 15 hours a week once either parent earns more than £100,000.

However, Ms Suter said: “You have to actively claim the free hours, through the Government gateway, rather than the hours being automatically awarded.

“You can also only claim from the start of the term after your child reaches the eligible age. So, for example, if they turn nine months at the start of October, you won’t be able to claim until January.

“If you haven’t applied by the start of the term you have to wait until the start of the following term to claim it. For example, anyone who misses the cut-off to claim for September will only be able to get the free hours from January.”

Ms Suter also pointed out a few caveats to the new support to take note of. Firstly, childcare costs vary hugely around the country, so the amount of savings they can make will depend on where they live.

She explained: “Inner London costs are the highest, which means that on average parents in that area could save up to £4,882 a year in nursery fees – although as this is the average some parents could save more.

“On the flip side, those living in the East Midlands pay the lowest costs in the country on average, and so the new free hours will save them £2,855 a year on average.”

The other caveat, according to Ms Suter, is that often parents will be charged some additional fees when claiming the free hours.

She said: “The Government pays nurseries a set hourly fee for the funded hours it pays for, and often this is below what nurseries would charge parents.

“While childcare providers aren’t allowed to charge explicit top-up fees, many will levy activity fees, meal charges or nappy costs to help make up the shortfall. This means the savings might not be quite as high as some parents are expecting.”

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