Working Tax Credit and the Costs of Childcare

If you work and you pay for the costs of childcare then you may be able to get additional financial assistance.  This is the ‘costs of childcare’ element of Working Tax Credit.

Our guide looks at who can claim, when to claim and what costs you can claim.

Who can claim the costs of childcare?

You can normally claim towards the costs of childcare if:

• You are a single parent and you work at least 16 hours per week
• You are a couple and if you both normally work 16 hours per week
• You are a couple, one of you works at least 16 hours per week and the other person is ill or disabled and is claiming a disability benefit, is a patient in hospital or is in prison

When to make a claim towards the costs of childcare

You can make a claim towards the costs of childcare:

• As soon as you start using childcare
• Up to seven days before the childcare starts

You should also make a claim within three months of starting using childcare as any costs incurred before that cannot be claimed.

You can claim childcare costs for any child up to the Saturday following the 1^st September after their 15^th birthday.  You can claim for an extra year if the child is on the blind register or you receive Disability Living Allowance for that child.

What childcare costs can you claim

You can claim for the costs of any registered or approved childcare.  The rules for what constitutes approved or registered care differ depending on whether you are in England, Wales, Scotland or Northern Ireland and so you should carefully check whether the care you want to use is approved.  Approved care can include nurseries, care provided by a school, foster care, a play scheme a childminder or a childcare club.

You won’t be able to claim tax credits if the care is not approved.

You can claim up to 70 per cent of your childcare costs subject to a weekly maximum limit.  This limit is:

• £175 per week for one child
• £300 per week for two or more children

As the maximum claim is for 70 per cent of your childcare costs you can claim a maximum of £112.50 per week for one child and £210 per week for two or more children.

The actual amount of benefit that you will receive depends on your income.  The lower your income, the more tax credits you will generally receive.

If you employ someone as an approved or registered home childcare provider (for example a nanny) you can get help for up to 70 per cent of the gross costs of employing them within the above limits.  Here, you can include the costs of any benefits in kind you provide, the costs of any employer’s National Insurance Contributions that you pay and any other costs incurred in employing that person.