Childcare costs
Contents
Introduction
Eligibility for help with childcare costs
The childcare cost condition
The work condition
Verifying childcare provider details
Verifying childcare costs
Childcare costs: reasonable usage
Childcare costs: meal costs
Calculating childcare costs
Reporting childcare costs
Childcare costs paid in advance
Childcare costs paid in arrears
Deposits and upfront fees
Run-ins
Run-ons
Wider government help with childcare costs
Introduction
Universal Credit provides support to households to help meet their eligible
childcare costs enabling claimants to take up work or increase their working
hours.
It supports the wider government childcare offer which includes free childcare
hours and tax-free childcare meaning that reasonable childcare costs do not form
a barrier to work.
Claimants can receive support with eligible childcare costs regardless of the
number of hours they work.
Any eligible childcare costs are not subject to the Benefit Cap.
Eligibility for help with childcare costs
The claimant must satisfy both the childcare cost condition and the work
condition to qualify for help with childcare costs.
Both claimants in a joint claim must satisfy the childcare cost condition and the
work condition (unless an exception applies) to qualify for help with childcare
costs.
Ineligible partners must also meet the work condition or have one of the
exceptions for the couple to qualify for help with childcare costs.
Full-time students, or students in a couple are not eligible for reimbursement of
Universal Credit childcare costs as they do not meet the work condition.
Part-time single students who meet the Universal Credit eligibility criteria and
satisfy both the work condition and childcare condition will be reimbursed eligible
childcare costs in the usual way.
The childcare cost condition
To meet the childcare cost condition, the claimant (or both claimants in a joint
claim) must satisfy all of the following:
• be responsible for a child or qualifying young person (up to the end of the
assessment period that does not include the 1 September following their
16th birthday)
• have paid for and reported charges for relevant childcare in the
assessment period in which they were paid or at any time during the
subsequent one
• the charges must be paid to allow them to take up or continue paid work
or in certain circumstances where they have recently stopped working, to
enable them to keep childcare arrangements which were in place before
they stopped working
The work condition
To meet the work condition, the claimant (or both claimants in a joint claim) must
satisfy one of the following:
• be in paid work (either employed or self-employed)
• have accepted an offer of paid work due to start before the end of the next
assessment period
• have stopped paid work in the current or previous assessment period
• be in the first or second assessment period of a new claim and have
stopped paid work no more than 1 calendar month before the date of their
initial claim
If a partner joins the household and the work condition is not satisfied in respect
of both members of the couple, childcare claimed in that assessment period
cannot be paid
There are exceptions to the work condition where one claimant in a household is
working and one of the following applies to the partner:
• has Limited Capability for Work or Limited Capability for Work and Work
Related Activity
• has regular and substantial caring responsibilities for a severely disabled
person
• is temporarily absent from the claimant’s household or is expected to be
absent for 6 months or more, for example in prison, hospital or residential
care
When a claimant is getting any of the following, childcare costs can be claimed
as they are treated as being in work:
• Statutory Sick Pay
• Statutory Maternity Pay
• Ordinary Statutory Paternity Pay
• Shared Parental Pay
• Statutory Adoption Pay
• Maternity Allowance
Verifying childcare provider details
Any of the following documents can be accepted as evidence to verify a childcare
provider:
• childcare contract
• letter headed invoice from the childcare provider
• letter from the childcare provider
These documents must be unaltered and they must display:
•
Ofsted registration number for England, or
•
Care Inspectorate registration number for Scotland, or
•
Care Inspectorate Wales registration number for Wales
•
Family Support NI registration number for Northern Ireland
For more information about registered childcare and some exceptions to the
requirement to be registered, see Registered or approved childcare.
In addition, the unaltered evidence must show:
• the name, address and contact number of the childcare provider
• the name of the child (the child must be a qualifying young person on the
Universal Credit claim)
• the amount paid or payable for childcare per week, month or term
• whether the contract varies during the year (for example, school holidays)
A childcare provider’s details are verified on the initial claim to childcare costs or
when there is a change of childcare provider.
If a claimant uses more than one childcare provider, they must provide details for
each one.
Verifying childcare costs
Claimants can report childcare costs when they make a new claim or at anytime
during an existing claim. They will be asked to provide proof of these costs within
1 calendar month from the point of declaring them.
The claimant must provide evidence to show the:
• dates covered by the childcare payment
• amount paid
• date the payment was made
Acceptable evidence includes:
• invoice or letter from the childcare provider
• receipt (including an ATM receipt)
• bank or credit card statement
Evidence may be obtained from an invoice or a combination of several different
documents. These must be unaltered and we can accept scans, photos,
screenshots and photocopies.
Cash payment receipt:
• registered invoice headed receipts will be accepted
• hand-written receipts will be acceptable as a last resort, although it must
show the provider name
• the cash receipt must show the date of payment and the amount paid
After the initial costs have been verified, the claimant must continue to report the
childcare costs they pay but may not be asked to provide evidence. This is
because the childcare costs have automatically been accepted.
If verification of childcare costs is required, the claimant has 1 month to provide
this evidence from the date it is requested.
Claimants are to be advised that they must keep evidence of the actual childcare
costs they have paid out and for which a claim has been made, for 2 years
because evidence may be needed at a later date.
Childcare costs – reasonable usage
For Universal Credit, reasonable usage means considering whether the costs
paid by a claimant to their childcare provider is generally reasonable when
balanced against the amount of earnings they receive or the hour they work.
If the level of childcare costs seems high when compared to the earnings
received or hours worked, consideration must be given to whether all of the costs
should be included (for example, if childcare costs exceed the claimant’s
earnings or the claimant is paying childcare for more hours than they work).
Some childcare costs which appear too high could be treated as reasonable.
These include, but are not limited to:
• disabled childcare costs
• a childcare purchasing pattern
• parents who are not actually in work but are treated as such for Universal
Credit, for example being on maternity leave
If a childcare provider’s contract policy is rigid, the agent must apply a flexible
approach when considering childcare costs.
If the claimant has to pre-agree childcare costs so they are available to work their
usual hours and the child care provider will not change those costs, we should
pay the childcare costs when fewer hours are worked.
A claimant on a zero hours’ contract may be unable to reduce their contracted
hours of childcare at short notice if their actual hours of work are less than
expected in a particular period.
In this case, the pre-agreed childcare costs are not considered excessive if they
reflect the number of the hours the claimant normally works.
The situations that make childcare costs excessive is not defined and all
circumstances must be taken in to account when deciding if costs are excessive
or not.
If the childcare costs are deemed excessive, the case must be referred to a
decision maker and an amount of reasonable expected childcare costs will be
applied.
Childcare costs: meal costs
Additional extras on childcare invoices must be considered on an individual
basis. When reporting childcare costs, the claimant may include the cost of
meals provided to the child by the childcare provider.
If the cost of the meal is included in the contract with the provider (but not
itemised on the invoice), these can be reimbursed to the claimant.
If the cost of the meal is an optional extra and the claimant is choosing to pay for
meals, these costs will not be reimbursed as they are responsible for those costs.
Calculating childcare costs
Any reasonable childcare costs paid to a provider which enables the claimant to
work, begin work or increase working hours can be allowed.
We can pay for items included in the monthly contract but we cannot pay for
optional charges or tuition fees.
Help with childcare costs is worked out as a proportion of a monthly cap. See
Rates for Universal Credit.
The claimant will be awarded up to 85% of their childcare costs up to the
childcare cost maximum limit of:
• £646.35 for 1 child, or
• £1108.04 for 2 or more children
If 85% of allowable childcare costs is less than the applicable maximum amount,
85% is the amount allowable. If 85% of the childcare costs exceed the maximum
amount, the costs are restricted to the maximum amount.
The allowable amount of childcare costs determined after this calculation has
been applied becomes the Childcare element.
The Childcare element (togetherwith the other allowable elements and the
Standard Allowance) makes up the Universal Credit award to which the Work
Allowance and Earnings Taper are then applied to determine the Universal Credit
monthly payment.
The System automatically calculates the childcare costs and attributes them to
an assessment period.
Claimants who pay for more than 1 month’s childcare in 1 assessment period,
will have any eligible support apportioned across the periods covered by the
childcare up to a maximum of 3 assessment periods.
Any help the claimant receives from other sources towards childcare, for
example their employer, will reduce the amount of support available via Universal
Credit.
Childcare costs for a qualifying young person will end in the assessment period
that does not include the 1 September following the day that they reach the age
of 16.
Reporting childcare costs
If a claimant qualifies for help with childcare costs, they must report the actual
costs paid in each assessment period as soon as they pay them or at any point
in the subsequent one. The actual costs must be reported even if the costs have
not changed from the previous month.
Childcare costs can be repaid when they are reported before the end of a
relevant assessment period if the charges are paid:
• in the current assessment period for childcare provided in that period,
(monthly or more frequently)
• in the current assessment period for childcare provided in a previous
period or periods, (arrears)
in either of the two previous assessment periods for childcare provided in the
current period, in advance
Childcare costs paid in advance
Childcare costs paid in advance must be reported in the assessment period in
which they are paid or in the subsequent assessment period. Any costs
reported after this are classed as ‘late reported’ and the claimant will need to
provide a reason for the late reporting. A decision will then be made to determine
if the claimant’s reason is acceptable and whether they are eligible for the
childcare costs payment.
Childcare costs which cover more than one assessment period may be reported
in any of those periods. However, only the proportion of costs that relate to the
assessment period in which the costs are reported and the subsequent relevant
assessment periods, can be reimbursed.
To be reimbursed, the period of childcare costs paid in advance can cover the
assessment period in which the costs are paid and the following two assessment
periods. The claimant is not eligible for reimbursement for any period that falls
after this as it has been paid too far in advance.
Childcare costs paid in arrears
Childcare costs paid in arrears are reimbursed in the assessment period in which
they are paid and reported. If an additional set of childcare costs are paid and
reported in the same assessment period, the two sums will be calculated to the
maximum amounts which could potentially cause the claimant to hit the caps.
Deposits and upfront fees
Claimants may receive help with eligible deposits and upfront fees and these are
treated in the same way as childcare costs for standard fees. Budgeting
Advances and the Flexible Support Fund can also be used but to support
claimants with deposits and upfront childcare costs.
Where a claimant has already received help for a deposit and upfront fees
through other DWP support (for example, the Flexible Support Fund), these
childcare costs cannot be claimed back.
Run-ins
Claimants who have accepted an offer of paid work which is due to start before
the end of the next assessment period are eligible for payment of childcare costs.
These costs can be paid during the assessment period in which they start work
and the assessment period prior to starting work.
Run-ons
Run-on after work stops
Claimants who stop work and have paid for childcare may be paid a proportion of
these costs for the assessment period in which they stopped work and for the
following assessment period.
Claimants who do not restart work by the end of the next assessment period will
not be eligible for help with childcare costs until they meet the qualifying
conditions
.
This run-on also supports those who make their initial Universal Credit claim
within 1 month of losing their job and
who have pre-existing childcare.
Run-on after a child dies
If a child dies and there are on-going paid childcare costs, the claimant will
continue to receive help with these costs if appropriate.
Claimants will continue to receive support with childcare costs for 3 months after
the death of a child. This includes the assessment period in which the child dies
and the following 2 assessment periods.
After this run-on period, the payment of childcare costs will stop in respect of the
deceased child.
Wider government help with childcare costs
Help with childcare costs can be claimed over and above the free childcare hours
but not in addition to HMRC’s Tax Free Childcare. Claimants can compare the
different offers and decide what is best for them on
GOV.UK
Tax Free Childcare
Claimants (and their partner in a joint claim) who are receiving Universal Credit
or have an outstanding claim to Universal Credit, will not be eligible for a Tax
Free Childcare account.
Free childcare and education
Free childcare and education is available for 3 to 4 year olds and some 2 year
olds. Claimants can find information on the support available from their local
council or through
GOV.UK. Childcare Offer for Wales
This is funded by the Welsh government and provides working parents with a
mixture of childcare and early education for children aged 3 or 4 years for up to
48 weeks per year.
Universal Credit claimants who may be eligible must be sign-posted to their local
authority website or the Welsh governmen
t Children and Families website to
check eligibility and to make an application.
Claimants can claim the first 30 hours’ free childcare from their Welsh local
authority and further hours can be claimed via Universal Credit.
It is in the claimant’s interest to claim from their local authority first as Universal
Credit only covers up to 85% of the childcare costs.
Claimants cannot claim the same cost of the childcare from both the Welsh local
authority and Universal Credit.
Childcare vouchers
Employers may help with childcare costs using childcare vouchers. For Universal
Credit purposes, these vouchers will be treated as ‘benefit in kind’ which means
they are not taken into account.
Help with learning costs may be available from the Childcare Grant. Claimants
will not be eligible for both the Childcare Grant and childcare support from
Universal Credit.
Claimants cannot get help towards any payments that were made using childcare
vouchers. If childcare costs are more than the value of the vouchers, they can
apply to Universal Credit for the additional amount.
