Help with Childcare Costs - Help with Childcare Costs when You are Working

There are several different schemes which provide help with childcare costs.

You can claim free childcare as well as help with childcare costs.

For example, Anais has a 3-year old daughter. Anais is entitled to 30 hours free childcare for her daughter, but Anais needs 40 hours per week childcare to enable her to work. Anais is paying for 10 hours per week extra childcare and she can claim help with the cost of that 10 hours.

You will only be able to get help with the costs for approved childcare.

There are a few different schemes to help pay childcare costs. Some of these schemes are closed to new applicants but if you are already getting help through the scheme you can carry on getting it. 

These schemes are still open to new applications:

• Childcare element of Universal Credit
• Tax Free Childcare.

These schemes are closed to new applications:

• Childcare element of Working Tax Credit
• Childcare vouchers/Employer provided childcare

Universal Credit

You will only be able to get help with your childcare costs through Universal Credit if you are claiming Universal Credit. Use our Benefits Calculator to find out if you could get Universal Credit.

If you get help with your childcare costs through Universal Credit, you will get up to 85% of your childcare costs, up to a maximum of £1,014.63 a month for one child, or £1,739.37 for two or more.

You can claim help with childcare costs for any children under 16 who you are responsible for. 

To claim help with childcare through Universal Credit, you will need to claim Universal Credit. If you are already getting Universal Credit but aren’t getting help with childcare costs, you should report these costs in your journal.

Help with childcare through Universal Credit is paid to you and not to your childcare provider. It is paid in arrears, which means it will only be paid to you after you have paid your childcare provider. 

You will need to report how much you have paid in childcare costs each assessment period . You will also need to provide evidence of how much you have paid.

If you pay for childcare that covers more than one assessment period , you will only get an amount of childcare costs element in each assessment period that covers the costs for childcare that took place in that assessment period .

For example, Kirsty’s child goes to an after school club for 10 hours per week at £3 per hour. The school asks parents to pay each term. Kirsty therefore needs to pay 15 weeks childcare costs at once, which comes to £450. This falls into three assessment periods and she is paid as if she had £150 of childcare costs in each assessment period . 

Help with upfront cost of childcare

If you are going to struggle to pay for childcare costs upfront, you may be able to get help through the Flexible Support Fund. 

To be eligible for this fund, one of the following must apply:

• you're starting work or
• you're increasing your work hours, for example you've moved from part-time work to full-time work.

You can use your online account or contact your work coach to ask if you can get support from the Flexible Support Fund. Your work coach will decide if you're eligible and consider:

• if your childcare provider was registered
• if the amount being charged is reasonable for the local area
• if you could have got help with childcare payments from elsewhere 

Your work coach will fill in forms with you. Your work coach will give you a form called FSF3, you will need to ask your childcare provider to complete one of the sections.

Money from the Flexible Support Fund does not have to be paid back.

If they refuse, you may be able to get an advance to pay the up front childcare costs. An advance will have to be paid back. If you live in Northern Ireland, you can get help through the Adviser Discretion Fund with your first month's childcare costs and still reclaim the costs from your Universal Credit. 

Tax Free Childcare

You can’t get Tax Free Childcare at the same time as Universal Credit or tax credits.

If you claim Tax Free Childcare, this will stop your tax credits. It won’t stop your Universal Credit automatically, but you will be asked to close your claim for Universal Credit. You also can’t get it at the same time as childcare vouchers.

Tax Free Childcare means the government will pay £2 for every £8 you spend on childcare, up to a maximum of £2,000 per year per child (or £4,000 for a child with a disability). It is managed through an online account. Your childcare provider will be paid direct from this account.

You can get Tax Free Childcare for children up to the age of 11. If your child has a disability and gets Disability Living Allowance (DLA), Personal Independence Payment (PIP) or Armed Forces Independence Payment (AFIP), or is sight impaired, you can get tax free childcare until the child turns 17.

To be able to get tax free childcare, you have to satisfy the earnings rules:

If you’re single:

• You need to be earning more than 16 x national minimum wage per week, (this doesn’t apply if you’re self-employed and started your business less than a year ago. It also doesn’t apply if you’re off work and getting Statutory Sick Pay (SSP), or if you’re off work on adoption or maternity/paternity leave )
• You need to be earning less than £100,000 per year.

If you live with a partner:

• You both need to be earning more than 16 x national minimum wage per week, (if one of you is self-employed and started your business less than a year ago this won’t apply to them), or
• One of you needs to be working and earning more than 16 x national minimum wage and the other needs to be claiming Carer’s Allowance, Carer Support Payment (Scotland) or Employment and Support Allowance (ESA), or
• One or both of you is temporarily off work on maternity/paternity or adoption leave or Statutory Sick Pay, and when you’re working you would satisfy the earnings requirements.
• If either of you has an income of more than £100,000 per year, you won’t be able to use the scheme.

You can apply for the Tax Free Childcare scheme online.

We highly recommend speaking to a trained welfare adviser before applying for Tax Free Childcare. In most cases, if you’re already getting Universal Credit or Tax Credits, you may be better off staying with those benefits. You can use the Turn2us Find an Adviser Tool to see what support is available in your local area.

Which scheme is best for me?

It can be hard to work out which of the government’s schemes you will be better off on. The Gov.UK website has a calculator to help you decide. However, it doesn’t show the help you can get through Universal Credit yet. You can use the Turn2us benefit calculator to check what help you can get through Universal Credit and compare that to the help you can find using the gov.uk calculator. If you are struggling to make sense of it, you should speak to an adviser.