Having a baby comes with certain unavoidable costs, but there are plenty of grants and schemes out there that can help. We investigate how to get what you're entitled to when you become a parent.
If you are expecting or have recently welcomed a new addition to your family this is sure to be an exciting time in your life, but you may be worried about the cost of bringing up a child.
However there are schemes available that can help you out, and plenty of ways for new parents to save on the cost of their new arrival. Here are some that are worth looking into.
Maternity Pay
When preparing for the arrival of a baby the last thing you want to think about is how you are going to afford basic living expenses. Maternity pay can really help with the cost by granting you funds for before and after the birth.
You’ll be eligible to claim for maternity pay if you’ve been in the same job for at least 26 weeks, and if you claim by at least 15 weeks before your baby is due. You’ll also have to be earning at least £90 a week before tax.
For the first six weeks of your pregnancy you can get 90% of your average earnings as maternity pay. After that point you’ll get £117.18 per week for the next 33 weeks, with your employer paying this in the same way they’d pay your salary. Your employer then claims this back from the Inland Revenue, so you don’t have to pay any of it back yourself even if you don’t return to work after maternity leave.
To get your maternity pay simply ask your employer and they will make the necessary arrangements – remember though to give the correct notice of your maternity leave (at the latest, the end of the 15th week before your expected due date).
Your husband or partner may also be able to claim paternity pay, with the same rules applying – he will have to have worked for his employer for at least 26 weeks, be earning at least £90 a week, and he will have to be the biological father of the baby. Paternity pay is £123.06 per week, or 90% of your average weekly earnings if this is less.
Sure Start Maternity Grant
The Sure Start Maternity Grant is a one-off payment for people on lower incomes that you don’t have to pay back. You’ll be given £500 for each baby, but you’ll have to be in receipt of one of the following benefits to be eligible:
- Income Support
- Jobseeker’s Allowance
- Employment and Support Allowance
- Pension Credit
- Child Tax Credits that are at a higher rate than the family element
- Working Tax Credit where a disability element is included in the award.
To get your Sure Start Maternity Grant you’ll need to fill in this form. You’ll be able to claim for the grant if you’re expecting a baby within 11 weeks or if you’ve given birth within the last 3 months.
Child Trust Funds (CTFs)
Another great way to give your child the best start in life is to save up some money for them to do with as they wish when they turn 18.
This is where a Child Trust Fund comes in useful - you can contribute anywhere up to £3,600 per year into the trust fund yourself, with any interest earned free of tax, plus your child will have received a voucher worth anywhere up to £500 from the government to get them started.
This makes for a great way to save for your child’s future – even if you don’t have the means to contribute into the CTF yourself, your child will still have some savings when they turn 18.
However only children born between September 2002 and 2nd January, 2011 qualify for a Child Trust Fund and they are now closed for new applicants but if your child didn't qualify for a Child Trust Fund then you will be able to open a Junior ISA in their name. For more information read our guide: Junior ISA Regulations: FAQs.
Childcare Vouchers
Childcare vouchers can help towards the cost of childcare when your child grows a little older and you or your partner, or both of you, have returned to work. They operate through a ‘salary sacrifice’ scheme whereby you can nominate a percentage of your gross pay to be donated towards the cost of childcare, meaning that the money will not be taxed.
For example, you could nominate £500 of your salary to go towards the cost of childcare. As part of your take-home pay this £500 would normally be taxed by 20% (or 40% if you’re a higher-rate taxpayer) and you would see only £375 of it. But through the childcare voucher scheme the full £500 whack would go towards the cost of childcare without the tax-man seeing any of it.
However it’s worth noting that the childcare voucher scheme is not suitable for everyone as it may interfere with tax credits, so it’s important to check before your apply.
Child Benefit
Another form of government support that every family will be eligible for is child benefit. This is a regular tax-free payment available to every parent who has a child under the age of 16, or children who are over 16 but in relevant education or training.
For your eldest child you’ll be given £20 a week to help towards the cost of bringing him/her up, and if you decide to have more children, you’ll get £13.20 a week for each of them. This is paid directly to your account until your children reach 16, and you don’t have to pay any of it back.
Child Tax Credits
You may also be eligible for child tax credits, which are essentially a payment from the government to provide extra financial support for those with children. You can find out if you might be eligible for tax credits here by filling in a quick questionnaire, but generally those on lower incomes who have dependant children should be able to claim.
