Universal Credit, are you aware savings (£6k-£16k) will stop help with child care?

[Kez143]

So I'm 41, self employed on a low income. I was getting a small amount (£140 per month)Child Tax credits in help towards my sons child's nursery fees. Due to my own mistake I closed the Child Tax credit claim in error. I was told I couldn't reclaim Tax credits to claim UC (universal credit) instead. But because of my pension ISA (bear in mind I have no employee pension whatsoever) which I can't get till I'm 60, I can't claim any UC, which means no help whatsoever with nursery costs, until I get the 30 hrs free the term after child's 3rd birthday.
This was a total surprise to me, so I was wondering if there is anyone else who was not aware savings (tapered amount between £6k to £16k) will prevent any help with child care costs?
I agree people with savings should not get benefits in general, but surely child care is a different matter?
My worry is that any family with saving will not get help on UC to help with child care, meaning there is no incentive for 2nd parent to work until the child is 3, unfortunately this parent most likely will be the mother. So what do you do? Spend your savings, or 2nd parent not work? I know this is not the "correct" option, but the reality this is what many people will do if child care is affordable, and there is no help.
Seriously i feel like buying a block of gold and locking it in a safe until I retire, because having my ISA pension mean no safely net at all if I get sick or my business goes under.
The governement is trying to incentive us to save, but on the other hand take away from any one who has!
If there are any money gurus out there, I would like to have a proper pension rather than a Pension ISA, but I don't know how to go about this.

On Universal credit childcare is just paid as another element of Uc which is then reduced by wages. So if you have savings over 16k then it will rule you out of any help. Its just a different benefit with different rules and thresholds.

Yes but savings don't count for tax credits.

Anyone can have a pension, it doesn't have to be in an ISA. Have a look at money saving expert, it explains the difference between a pension and a LISA. Is that what you have? You can take the money out of a lifetime ISA and you will lose the bonus and I think 6% but if you need the money then that is an option.

I got myself a stakeholder pension with Scottish Widows. Money comes out of my account every month. I pay £400 each month and government pays in £100, so £500 into pension every month. I am self employed and anyone can get one. You can also pay in lump sums if you want.

Yes I have a LISA for my pension. But I want to change it.
caringcarer / CannyLad - Thanks for that, I didn't realise there were other options than LISA that government pays into.

On the child care front, have you looked into a tax free childcare account?

You may not get as much help as with tax credits but the gov add an extra 20% to the amount you put in each month (I think they cap their contribution at 500 every 3 month).

We don't qualify for tax credits/UC but this scheme means our childcare costs are a little more palatable!

Thanks I'll look into that.

Pension would normally come out of money earned before tax but if you are a non tax payer you can still put £2,880 into a pension this year and the government will top it up to £3600. So in theory if you take the money out of your Lisa, use some to pay for childcare and put the maximum into a pension you won't lose as much as you could otherwise. Need to check for UC that it's not derivation of savings though, I don't know what the rules would be on that.

As a self employed person you need to earn equivalent of minimum wage for 2 days per week averaged out over the year to claim the tax free child care. I think it's about £6,500 per year profit. If have just started a new business you don't have to meet that income threshold for the first year of trading. I spoke to HMRC about it and they said they will follow up if it looks like you're not making enough based on your end of year tax return.

Hope this helps, it's taken me a year to piece all the information together and understand what it means for my circumstances!

I've looked and we should qualify for the tax free child care. Now just got to sort pension. It's all a bit confusing.