Parents In The UK Can Now Get £10,000 In Interest-Free Loans To Afford Childcare
09 Jan 2020
Approx Reading time: 3 minutes
- A new scheme for employee benefits has outlined that parents would now be able to borrow up to £10,000 in the UK as interest-free loans to pay for childcare expenses.
- The scheme has been launched by a company called Catapillr, with the goal of making childcare more accessible to parents across the country.
- Employers must sign up and pay £100 per loan in order to participate in the scheme.
Childcare in the UK is an expensive form of service, one that can cost parents around £12,000 in a year for a 2-year-old toddler on a full-time basis, according to data provided by Coram Family and Childcare, a charity operating in the country.
The scheme, called the Childcare Cash Advance Scheme, would require employers to sign up before their employees can benefit from it. This should not be an issue considering some employers are on board with the interest-free loans for rail season tickets, which essentially works on the same model. However, employers must contribute £100 annual on every loan taken out by their employees under this scheme in order to participate.
The funds can be borrowed by all parents that have children at the school-going age, or younger, with the option of making repayments over a 12 month period.
Catapillr has an online hub that needs to be used for all loan management purposes. The tax-free childcare schemes provided by the government can also provide a further 20% benefit on top of the loan.
For those earning wages that are not fixed on a monthly basis, the loans offer a fixed source of cheap funds that can allow payment of childcare fees. Those who are unable to meet upfront charges associated with childcare and also claim from Universal Credit may also be able to benefit from the scheme.
At this time, parents are able to claim childcare costs from Universal Credit for up to 85% of the total bill. But, with this scheme, the entirety of these costs can be paid at the start. However, taking out the loan will not allow parents to claim costs from Universal Credit any longer.
The idea behind Catapillr stems from the personal experience of its own founder, Phil Robinson, who also found it very difficult to pay for childcare when it came to requiring the service for his own three children. Now, with this scheme, Robinson is aiming to help parents around the country find it easier to access childcare so they can focus on work.
Repayment of the loans will happen through a deduction on the net pay of the borrower, on a regular basis.
Although these are interest-free loans, experts have opined that parents should still treat them just like any other form of debt. Since these loans come with a term of one year, parents must keep in mind that they need to make all repayments within 12 months, and plan accordingly.