Your Baby and Childcare Benefits
We’re sure you’ve already noticed that having a baby is not cheap - and the costs will continue to grow as your child grows. There is support out there and other ways of making savings as you start a family.
We’ve outlined some of the benefits and schemes which are available. Many of them are means-tested, with strict eligibility criteria. You can find out more at the gov.uk website.
Maternity Pay
If your employer will not pay you Statutory Maternity Pay (SMP) while you are on maternity leave you may be entitled to the Maternity Allowance.
This is a payment of £151.20 a week or 90% of your average weekly earnings (whichever is less) for 39 weeks.
You can claim it from 26 weeks pregnant but you will have to prove your income, pregnancy and that you have been refused SMP by your employer.
If you are self-employed and were worried you wouldn’t have an income during your maternity leave you should definitely investigate if you are eligible for the Maternity Allowance.
Sure Start Maternity Grant
This is a one off payment of £500 from the Social Fund to help you buy things you may need for your baby.
You will be eligible for the grant if it is your first child, or you are expecting multiples and have children already and if you or your partner already receive certain benefits such as Universal Credit or Jobseeker’s Allowance.
You do not have to pay the grant back.
Child Benefit
Anyone who has a child under 16 can claim Child Benefit but you will have to meet a number of criteria. Only one parent can claim for a child but you can claim for every child you have.
The rates for the 2020/21 tax year are:
£21.05 per week for the eldest or only child
£13.95 per week for each additional child.
However, if either you or your partner earns more than £50,000 a year, you’ll have to pay back some or all of your Child Benefit in the form of extra Income Tax. It could still be worth applying to help protect your state pension as you will earn National Insurance points.
Tax Credits
This is quite complicated to explain so always check gov.uk for the latest information and to check what your individual circumstances entitle you to.
Universal Credit has replaced child tax credits for most people. It is means-tested and can top up your income if you are responsible for one or more children. You don’t have to be working to claim it and you get it until the September following your child’s 16th birthday.
As of 6 April 2017, you can only get child tax credits for a child if they're your first or second child. You could get £2,830 a year for each child. There are some exceptions to this rule, for example if you’re expecting twins or triplets but check gov.uk for more information.
To get the maximum your annual income needs to be less than £16,385 in the 2020/21 tax year. The more you earn the less you can claim.
Junior ISAs (Individual Savings Accounts)
A Junior ISA is a long-term, tax-free way of saving money for your child. It can be set up by a parent or guardian and can only be withdrawn by your child when they turn 18.
In 2020/21 the maximum amount that can be saved is £9,000.
The ISA can either be in cash or in the form of stocks and shares. It is favoured by parents because you do not have to pay tax on it or on any growth or dividends you receive.
Shop around for the best interest rate. Some banks and building societies will give you 2.5-3.5%.
Help if you have a disabled child
You local council will be able to help if you are caring for a child who has disability.
You may also be able to apply for the Disability Living Allowance which is offered to families where a child needs much more looking after than a child without a disability or if your child cannot walk.
The DLA is between £23.60 and £151.40 a week, depending on the level of help you child needs.
More information
As mentioned above everyone’s circumstances are different so always check on the gov.uk or your local council website to see what support you might be entitled to.
