Understanding Universal Credit and Childcare

Universal Credit is replacing a number of state benefits including Working Tax Credits. It incorporates a childcare element for people in work, regardless of the number of hours they’re working.

The substantial cost of childcare is overwhelming for most people and is a factor that may discourage parents from returning to work, but with the childcare element of Universal Credit you might be able to claim as much as 85% of your childcare costs.

So let’s look at the eligibility for claiming childcare costs with Universal Credit, how much you might receive if you are eligible, and how you make a claim?

Are you eligible to claim childcare costs under Universal Credit?

To be eligible to claim up to 85% of childcare costs with Universal Credit, you need to:

• Be in work or have an offer of a job
• Be paying for childcare for the dependent child or children stated on the application form
• Be paying a registered childcare provider – in Scotland this typically means registered with The Care Inspectorate
• If you have a partner and live together you must both be in work or have job offers, unless one of you is caring for someone severely disabled, or has limited capability to work due to their own health issues

If you’re claiming Child Benefit for a dependent child or children, in general you should be able to claim for their childcare costs alongside Universal Credit. Relevant costs are claimable until 31st August after the child turns 16 - essentially, you receive payment of Universal Credit with an element towards the cost of childcare included.

How much can you claim towards childcare?

The government has placed a limit on the amount that can be claimed for childcare costs:

• Up to £646.35 for one child
• Up to £1108.04 for two or more children

Don’t forget to report any changes in your circumstances, however, as it could affect the amount you receive. Reportable changes include different working hours, an increase or decrease in the childcare costs you pay, and if your childcare provider is no longer registered.

How to apply for Universal Credit childcare costs

On the Universal Credit application form you’ll need to supply information on the childcare provider, including their registration and contact details, as well as details of the costs you’re paying.

Typically, you’ll need to wait around five weeks for your first payment of Universal Credit, but living in Scotland means that when payments do commence you can choose to receive them either once a month or twice a month. Childcare costs will be paid alongside your Universal Credit payment.

If you would like more information about Universal Credit and childcare, tailored to your own circumstances, our expert team at Scotland Debt Solutions can advise you on your situation and help with your claim. Please contact one of our licensed insolvency practitioners to arrange a same-day meeting free-of-charge – we work from a network of offices around Scotland.