⚠️ We are working hard to ensure this guidance is up to date. However, you should bear in mind that things may change as the government respond to the ongoing situation.
Coronavirus: childcare support and benefits for children
Coronavirus guidance: childcare costs
The coronavirus (COVID-19) outbreak is having far-reaching financial impacts on individuals and businesses across the UK, and indeed across the world.
You may be wondering what impact some of the changes will have on childcare support and benefits for children.
My hours of work have reduced/I am furloughed, can I still claim help with my childcare costs?
If you claim help towards your approved childcare costs through tax credits, you have to normally work a certain number of hours a week. Usually, if your normal hours change and you fall below the required number of hours, you will need to report this to HMRC and will stop being entitled to the childcare element (although there may be a four-week run-on of payments). However, HMRC have relaxed the usual rules so that temporary changes to working hours during the coronavirus crisis will not generally impact on normal working hours. We have published a table that explains how different work changes currently affect working tax credit (WTC) on our tax credits and coronavirus page.
For people who are in qualifying remunerative work and claiming WTC who continue using childcare and therefore incurring costs can continue claiming the childcare element. If you have lost your job (been made redundant) or stopped trading as a self-employed person and no longer meet the qualifying remunerative work test for the childcare element, then you will no longer be able to claim help with childcare costs through tax credits.
Earlier in the coronavirus pandemic, some tax credit claimants were working or treated as working their normal hours under the new tax credit rules and were unable to send their children to their usual childcare provision but they were required to keep paying fees or to pay retainer fees.
HMRC temporarily continued to accept childcare costs incurred and paid in cases where the claimant was unable to send their childcare to their childcare provision until 7 September 2020 when HMRC announced that this concession ended. From that date, childcare costs paid for childcare that does not take place will no longer be accepted for tax credits. If you expected to still be in this position after 7 September, you had to contact HMRC’s tax credits helpline to let them know so that your award could be amended.
In January 2021, HMRC also said that anyone claiming help with their childcare costs through tax credits must tell HMRC as soon as possible if their child stops going to childcare for four weeks or more, to avoid overpayment. According to HMRC, the four-week period is calculated from the last day the child attended the provider. This also applies where the childcare is still available, but the parent or carer does not send their child.
If childcare is not being provided, but parents and carers are being asked to keep paying their provider in full or in part, these costs cannot be covered by tax credits. According to HMRC, where childcare stops being provided, HMRC will continue to pay the childcare element of Working Tax Credit for four weeks.
If you claim help towards your approved childcare costs through universal credit (UC), the general rule is that you can claim for the childcare costs (up to a maximum limit) where the childcare is needed so that you can take-up or continue in paid work. There is some information about how help with childcare in UC works in our Childcare section.
Our understanding is that DWP’s current position for UC is that if you can access registered childcare and the childcare provision actually takes place, then you can claim your childcare costs with your UC claim as usual and it will be paid as part of your UC award, in the normal way.
DWP have also confirmed to us that if you are employed, but not actually working because you are furloughed, if your child is attending their registered childcare provision then you can continue to claim your childcare costs with your UC claim as usual. If you are on unpaid leave or reduced hours due to coronavirus (not furloughed) or if you are self-employed and unable to work due to coronavirus, you should contact DWP to confirm the position with your childcare.
Additionally, if you pay for your childcare in advance, payments will be reimbursed in the normal way, which means the cost can be split across a maximum of three assessment periods. At the end of each assessment period, the costs for childcare used in that assessment period will be reimbursed.
It is important to note that – at the end of any assessment period – you can only be reimbursed for childcare that has actually taken place during that assessment period.
If you pay (and report) advance childcare costs for a future assessment period, but no childcare actually takes place during that time, you will not be able to reclaim those costs as part of your UC claim.
Your childcare provider might ask to keep an advance payment, saying that it will cover your costs whenever your childcare resumes. Please note that you will only be able to reclaim these costs if the childcare resumes during the assessment period in which you made the payment, or within the next 2 assessment periods after that.
If your childcare provider asks for a payment to keep a place for your child – sometimes known as a retainer – this is will not count as relevant childcare costs for UC and will not be reimbursed as part of your UC claim unless it is actually an advance payment for childcare costs.
Tax-free childcare scheme
If you claim help towards your childcare costs through the tax-free childcare scheme (TFC), you will usually have an online childcare account and the money you pay in to that account attracts a Government top-up towards your approved childcare fees. There is some information about how TFC works in our Childcare section.
If you are wondering whether you can withdraw funds in your childcare account to pay for things other than approved childcare, you may like to read our separate piece: Accessing money in childcare schemes.
TFC is usually based on a three-month entitlement period and you will have been asked to confirm that your income was expected to be above a certain level for your entitlement period. That means, if you are in the middle of an entitlement period, there will be no impact on your TFC if your hours fall or your work stops. However, if you need to reconfirm your eligibility you will have to confirm that you expect your earnings to be above the threshold over the next three months.
The Government confirmed that until 31 October 2020, any working parent usually eligible for 30 hours free childcare or Tax-Free Childcare was to remain eligible if they fell below the minimum income requirement due to the coronavirus outbreak.
The Government have since confirmed that these protections continue from 1 November 2020 but only for working families who receive support through either the SEISS (if they are self-employed) or through the Coronavirus Job Retention Scheme (furlough scheme), via their employer. You can read more detail about how changes in your normal work pattern due the coronavirus outbreak are treated for TFC (and for 30-hours free childcare, in England) on GOV.UK.
Parents who are critical workers will also remain eligible for these entitlements if they expect their income to increase over the maximum threshold but not over £150,000, where the additional income is mainly attributable to work associated with tackling coronavirus. The Government have confirmed this concession will remain in place for the whole tax year 2020/2021.
I am ill/self-isolating and cannot take my child to childcare can I still claim for the childcare fees that I have to pay during this period?
As a general rule, periods of sick leave do not normally affect entitlement to Government help with childcare. During the current coronavirus outbreak, Government guidance outlines that periods of isolation in line with official guidance are also to be regarded as periods of sick leave.
For tax credits, providing you were working for the required number of hours before your period of sickness, you will be treated as still being in remunerative work for up to 28 weeks whilst you receive any of ESA, SSP or National Insurance Credits because you have limited capability for work – or you would receive them but for the fact you are self-employed.
Usually, the childcare rules in tax credit require your child to attend the childcare and you should contact the tax credit helpline to clarify.
If you are receiving UC, you should check with DWP.
My childcare provider has temporarily closed but under my contract I still have to pay my childcare provider even though my child isn’t attending. Can I claim help with these costs?
Qualifying childcare costs can sometimes include fees that have to be paid to retain the child’s place, sometimes called ‘retainer fees’. DWP have confirmed that retainer fees cannot be included as childcare costs unless they are subsequently used as payment for actual childcare provision. You should check with HMRC (for tax credits and TFC) and with DWP (for UC) to confirm whether these fees are allowed.
If the fees are not retainer fees, our understanding of the rules is that usually children need to actually attend the childcare in order to continue claiming help with fees and HMRC have confirmed that they will not accept childcare fees as relevant childcare for tax credits where the child is not attending or the childcare is not being provided. In the meantime, if you are unsure you should contact the tax credit helpline to clarify.
My childcare costs have stopped, what shall I do?
For tax credits, if your childcare costs have stopped, you will need to work out when the change took place and notify HMRC about the change to your costs. There is some information about calculating changes to childcare costs for tax credits on our website for advisers, Revenuebenefits.
For UC, if your childcare costs have stopped, you simply don’t need to report childcare in your UC on-line journal.
For TFC, if your childcare costs have stopped, you may like to read our separate piece: Accessing money in childcare schemes.