Affordable childcare: Families on incomes of up to €100,000 may qualify for subsidy

Families earning in excess of €50,000 a year could save about €300 a month on childcare

As one supermarket puts it, “every little helps”; and when it comes to the swingeing costs of childcare, this is particularly true.

Indeed many families across the country were hoping for a substantial improvement in last week’s budget to the €20 weekly universal childcare payment which is currently available for children between the ages of 24 weeks and 36 months, or the subsequent Early Childhood Care and Education Scheme programme.

So the latest advances in the affordable childcare scheme, announced in last week’s budget, will come as a welcome relief to many, even if they may not yet make a huge difference to many families.

The changes however, which kick in from next year, mean that 7,500 children will qualify for the scheme for the first time, while a further 40,000 will get improved subsidies, and even families earning as much as €100,000 before tax will benefit from an increased subsidy.

Who will get a full subsidy?

Currently, only those on net incomes of €22,700 or less can qualify for the full subsidy of up to €220 a week per child. However, this is now set to rise by 14 per cent or by €3,300 to €26,000, thus "poverty proofing" the scheme Minister for Children and Youth Affairs Katherine Zappone said.

It means that more people will qualify for the higher rate of subsidy, which is paid at a rate of €5.38 an hour for a child aged between six and 12 months, falling to between €4-€5 an hour for children aged between one and five years, and to €3.96 an hour for school-going children.

Consider a lone parent on net annual income of € 26,000(gross €26,500), with one child aged two years and in need of 40 hours of childcare per week. This person will see their subsidy jump from €148 a week to €175 a week, or €700 a month.

The subsidy declines as income rises; for example, a family with gross income of €34,500, and two children aged one andtwo and a half and in need of 25 hours of childcare per week, will be entitled to a subsidy of €220 a week, up from €187 previously.

Who will qualify for something?

At the moment, if your income is in excess of €47,000, you won’t qualify for anything more than the €20 a week universal payment, unless you have enough children to push you into a qualifying bracket.

From 2019 however, the threshold will increase to €60,000, which means that 7,500 more children will benefit from the scheme.

Consider a family of four on gross income of €64,000 (net of €47,500). Currently, they are only entitled to a weekly subsidy of €52, but this will rise to €128 under the new proposals, so they stand to save €304 a month .

And the latest increase is also pulling more people in.At the moment, a family earning €87,000 gross (or €53,000 net) with two children aged two (40 hours childcare per week) and five (17 hours out-ofschool care per week) gets just €20 a week under the universal subsidy. However, from next year, their weekly subsidy will jump to €93, thus saving them almost €300 a month.

What about higher earning families?

Even “higher earning” families earning in excess of €100,000 might see their subsidy rise substantially on the back of the latest changes. A family earning €102,000 for example, with three children aged two, five and seven, and who contribute 10 per cent of their salary to their pension, will make the €60,000 net income cut-off. This will boost their weekly subsidy from just €20 to €92, again for savings of almost €300 a month.

What next?

The latest improvements in the scheme come ahead of the much-anticipated, and much delayed, fully-fledged Affordable Childcare Scheme (ACS), which had been due to be introduced in September 2017. Parents in desperate need of further childcare relief will now have to wait until the end of 2019 to learn more about this scheme, with launch plans currently being finalised, Ms Zappone said.

The “radical” plan will replace the existing targeted childcare programmes with “a single, streamlined and more user-friendly scheme, and will include wraparound care for pre-school and school age children”.