During the coronavirus pandemic, some tuition providers moved their classes from face to face to online due to various restrictions. Other providers have been offering online tuition as a separate option for some time. This page explains the rules for tax credits and tax-free childcare. Other childcare schemes, such as universal credit, have different rules and so you must check the position carefully.
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Claiming childcare support for online tuition
HMRC have confirmed to us that childcare that is tuition and provided wholly online is not qualifying childcare for tax credits. This means that the costs cannot be covered by the working tax credit childcare element even if the provider is registered. However, online tuition costs may be covered under the tax-free childcare scheme in certain circumstances explained below.
If you are currently claiming help from tax credits to pay for online childcare/tuition costs, or have done in the past, you should check the position carefully. If the tuition was delivered online for a limited period due to the coronavirus pandemic, those costs may have been covered under various COVID-concessions introduced temporarily to help claimants while restrictions were in place.
Childcare element of working tax credit
Whether you can claim depends on the type of childcare and where it is taking place:
If you meet the qualifying conditions and other usual rules of the childcare element, then as long as:
- the tuition provider is registered with a relevant body in line with the regulatory conditions (for example OFSTED in England),
- the tuition provider cares for your child as well as provides tuition, and
- it is undertaken in line with the other childcare element rules (for example if the provider is a relative, the care must be provided away from the child’s own home)
those costs will be qualifying childcare costs and can be included in your claim, in other words it does not matter that your childcare provider also provides tuition. Note, you cannot claim for any costs for compulsory education.
HMRC say that you cannot claim the childcare element to help with the costs of online tuition. This is because they do not regard online tuition as providing any element of care and you can only claim the childcare element if you are incurring and paying charges for childcare. The rules say that childcare means care provided for a child.
HMRC’s view is that where face to face tuition includes providing care for the child as well as tuition, it can be regarded as childcare. However, online tuition is tuition only and does not involve providing care for the child.
Other online childcare
Most of the cases we are aware of involve online tuition, however we understand that HMRC’s position is likely to apply to any online childcare where no face to face care is being provided.
Options if you disagree with HMRC’s view about online childcare/tuition
If HMRC have:
- refused to include childcare costs in your tax credit claim because they relate to online childcare/tuition, or
- have removed childcare costs (resulting in an overpayment) previously claimed for
you can ask for a mandatory reconsideration of the decision they make about your award. This is the first step in the appeals process. If you still disagree with HMRC’s decision following the review, you can ask an independent tribunal to look at the decision. There are strict time limits for appeals.
The tax credit legislation does not specifically mention childcare provided online – it refers only to care being provided for a child. It is therefore open to a tax credit claimant to challenge HMRC’s interpretation of the law at a tribunal.
If you are in this position, you should seek advice from an experienced welfare rights adviser. Citizens Advice is a good place to start.
Childcare during the coronavirus pandemic
HMRC’s view is that you cannot claim the childcare element to help with the costs of any online tuition even if the provider is registered.
However, from the start of the COVID-19 pandemic until 7 September 2020, HMRC operated a temporary concession to help tax credit claimants whose children were not able to attend their usual childcare setting but who still had to pay the costs. From 8 September 2020, this concession was withdrawn because most childcare providers were able to re-open.
If you had a child who was getting face to face tuition from a registered provider and who could not attend that tuition setting due to the impacts of coronavirus, any costs you had to pay out during that period (7 March 2020 to 7 September 2020 inclusive) could still be covered by the childcare element of working tax credit, even though your child could not attend. Whether the provider was able to offer an online replacement is irrelevant for the purposes of the concession.
The following examples show how these rules worked.
If you have been claiming for online childcare
If you are claiming childcare costs from tax credits which include costs for online childcare/tuition then you should contact HMRC.
HMRC carry out checks of tax credit claims including the childcare element and may ask you for evidence of any childcare costs claimed. If they decide you have claimed for costs that are not qualifying costs, they may reduce your award and you may be asked to repay any overpayment.
Tax credit overpayments due to including online tuition/childcare costs
As explained above, HMRC’s view is that online tuition is not qualifying childcare for tax credit purposes. If HMRC have changed your award/removed childcare costs or not included childcare costs you have reported, you can appeal their decision about your award.
However, if you agree with HMRC’s decision or if a tribunal finds that HMRC’s view on online childcare/tuition costs is correct, then you may be left with an overpayment if you had already claimed for those costs.
You can dispute the recovery of the overpayment. HMRC have a dispute process which can be used if you have an overpayment but you think you should not have to pay it back. This is usually because HMRC have not met their responsibilities but you have, or HMRC have given incorrect advice. If you are successful at disputing an overpayment, it will be written off and you will not have to repay the money. HMRC deal with disputes internally.
Prior to February 2022, HMRC guidance on GOV.UK did not cover the point that online childcare/tuition costs are not qualifying childcare costs for tax credit purposes. Before then, GOV.UK stated that you could claim for childcare costs provided by a registered childminder, nanny, playscheme, nursery or club. In addition the Government’s childcare choices website does not indicate that the rules for tax credits are different in relation to online childcare compared to tax-free childcare (for example). The tax credit page on GOV.UK was updated in February 2022 to state that the childcare must be provided in-person and not online for working tax credit.
You should include as much detail as possible in your dispute about why you included your online childcare/tuition costs and whether you checked any guidance or contacted HMRC. There is a time limit to dispute recovery of an overpayment which is three months from the date of the decision that gives rise to the overpayment.
However, whether a dispute in this situation will be successful will depend on the facts of your particular case. If it is not, then you can complain to HMRC and if you disagree with the outcome of that complaint then you can ask for it to be looked at again and eventually ask the Adjudicator to consider your complaint.
Tax-free childcare and online tuition
Tax-Free Childcare (TFC) accounts can be used to pay for qualifying childcare which is defined as ‘any form of care or supervised activity for a child that is not provided in the course of the child’s compulsory education’. Our understanding is that HMRC accept online tuition can, depending on the circumstances, be a supervised activity for TFC purposes and therefore it may be possible to use that scheme to pay for online tuition.
However, the TFC rules state that payments can only be made for childcare where one of the main reasons is to enable the claimant to work. If the claimant needs to be present and supervising the child themselves during the online tuition, that may mean they are not working during those periods and HMRC may argue that enabling the claimant to work is not a main reason for the childcare. However, it will depend on the overall circumstances of each individual case as to whether the work test is met.
There are some examples of this ‘main reason’ test on the childcare choices website.
Other government childcare schemes and online childcare
Each benefit/scheme has its own rules and definitions of childcare. You should contact the department or authority who administers the scheme you use to find out if online childcare/tuition can be included within the childcare costs that you claim.
The childcare element of universal credit (UC) has different rules to tax credits and TFC. It is similar to TFC in that it has a work requirement and costs can only be included if they are for childcare arrangements that enable the claimant to take up paid work or continue in paid work. UC claimants should contact DWP to ask if tuition costs, including online tuition costs, can be covered by the childcare element of UC.