Coronavirus: childcare support and benefits for children

Updated on 17 August 2020

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.

Image of a person writing the word childcare
(c) Shutterstock / Ivelin Radkov

⚠️ We are working hard to ensure this guidance is up to date – however, you should bear in mind that things may change on a daily basis as the Government respond to the ongoing situation.

Childcare costs

1. My hours of work have reduced, can I still claim help with my childcare costs?

  • Tax credits
    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 in our employee section, however, the impact of this on the childcare element is not yet clear.

We have been waiting for confirmation from HMRC regarding the position for WTC claimants who get help with childcare costs. Those who are in qualifying remunerative work and who continue using childcare (because they are key-workers) 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.

A number of tax credit claimants are working (or treated as working their normal hours under the new tax credit rules and have been unable to send their children to their usual childcare provision but they are expected to keep paying fees or to pay retainer fees. The position in relation to the WTC childcare element where the childcare cannot be accessed has remained somewhat unclear so we continue to recommend that if you are claiming help with childcare costs but cannot access the childcare, you should contact the tax credits helpline for advice and make a note of the date, time and advisers name and the advice given. Having said that, we have been made aware that HMRC have continued to accept childcare costs incurred and paid in cases where the claimant has been unable to send their childcare to their childcare provision. However, on 5 August, HMRC confirmed that they have been allowing people to continue claiming for childcare costs where children have been unable to attend childcare provision due to COVID-19. At the same time, they have announced that this concession will end from 7 September 2020 and childcare costs paid for childcare that does not take place will no longer be accepted for tax credits after that date. If you expect to still be in this position after 7 September you should contact HMRC’s tax credits helpline to let them know so that your award can be amended to help prevent overpayment.

  • Universal credit
    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.

On 29 April 2020, DWP published guidance to confirm that only people who were critical workers would be able to access Universal Credit childcare for a period. As the rules around childcare provision are beginning to change under the government’s response to the coronavirus outbreak, DWP have updated their position.

From 13 May 2020, childminders can open to non-critical workers but in a limited way under strict new measures and childminders and nannies are allowed to offer paid childcare to children of non-critical workers, although only if they are caring for children from the same household. DWP’s updated position for UC is that if you can access registered childcare, whether or not you are a critical worker, 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.

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 3 assessment periods. At the end of each assessment period, the costs for childcare used in that assessment period will be reimbursed.

It’s 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 on-line 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 any working parent usually eligible for 30 hours free childcare or Tax-Free Childcare will remain eligible if they fall below the minimum income requirement due to the coronavirus outbreak and they have also confirmed that this concession will end from 31 October 2020. 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 the GOV.UK website.

Subject to Parliamentary approval, parents who are critical workers will also remain eligible for these entitlements if their income has increased over the maximum threshold and the Government have confirmed this concession will remain in place for the whole tax year 2020/2021.

2. I have been laid off furloughed due to the coronavirus outbreak, can I still claim help with my childcare?

HMRC have relaxed the usual rules during the coronavirus crisis. We have published a table that explains how different work changes currently affect working tax credit (including the childcare element) in our employee section.

3. 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.

4. 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 also 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 - however we will update the website as soon as we receive more information. In the meantime, you should contact the tax credit helpline to clarify.

5. 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 about Accessing money in childcare schemes.

Qualifying young person and full-time education

1. The college has closed, is my son/daughter still classed as being in full-time non-advanced education?

We are currently waiting for guidance from HMRC and from DWP about whether and how the closure of schools and colleges will affect the rules around entitlement to Government support for qualifying young people.

Free school meals

1. My child isn’t in school, can they still get free school meals?

While schools and colleges are closed due to the coronavirus outbreak, local authorities and schools/colleges will be making arrangements to provide equivalent free school meals provision for those entitled to free school meals on financial grounds. The provision will vary across the UK but should meet the equivalent value.

For families who already qualify for free school meals on the grounds they meet the conditions of receiving UC and have earnings below the threshold or child tax credit (CTC) and have earnings below the threshold, we understand the local authority and educational establishment will identify them and make local arrangements.

Families who start to meet entitlement conditions for free school meals due to a reduction in income and/or new entitlement to UC, may need to apply for free school meals.

More information on Coronavirus guidance
Information for employers Taking money from your pension
What is the Job Retention Scheme? Help with paying your tax
Employees: illness or self-isolation Information if you are a student or are repaying your student loan
Employees: work changes Accessing money in childcare schemes
Employees: universal credit and pay High Income Child Benefit Charge: What to do if your income falls?
Redundancy explained School closures: family members might be able to claim state pension ‘babysitting’ credits
Support for limited company directors Childcare support and benefits for children
Self-Employment Income Support Scheme Inheritance tax exemption
SEISS parental extension Support for Carers
Self-employment and paying tax Carer’s allowance: can you claim?
Self employment: Illness or self-isolation Volunteering and job opportunities
Self-employment: work changes Scams: please be vigilant!
Help for businesses in Northern Ireland, Scotland and Wales Dealing with HMRC during the coronavirus outbreak
Taking money from your savings Tax guides

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