Working Tax Credit (WTC) and Universal Credit (UC):
The Equality Act applies to childcare providers. They are not allowed to discriminate against disabled children and must make ‘reasonable adjustments’. They are allowed to charge extra if they need to employ extra staff or limit their provision to fewer children, but they are only allowed to charge for the extra costs incurred.
70% of your childcare costs up to £175 a week for one child or £300 a week for more than one child can be included in your claim for Working Tax Credit (WTC). This applies if you are a lone working parent, if both parents work, and if one parent works and the other is incapacitated, in hospital or in prison. Check how many hours a week you need to work to qualify for WTC. The rules are slightly different for Universal Credit (UC), where up to 85% of your costs can be covered, and although you must be working, there is no minimum number of hours.
You can claim for disabled children up to the end of the week including 1st September following their 16th birthday (15th birthday for non-disabled children). The childcare must be registered or approved. Care by a relative of the child does not qualify unless it is provided away from your home and the relative is registered or approved. As your income increases the amount of WTC or UC you get is tapered off.
Some employers provide childcare vouchers as an extra or through a salary sacrifice scheme. There are tax and National Insurance concessions on vouchers up to £55 a week. Vouchers can be used for registered or approved childcare. You cannot include the cost of childcare which is paid for by vouchers in your claim for WTC and sacrificing some of your salary may have a knock-on effect on pay rises and pension contributions so it essential to calculate whether vouchers are advantageous in your circumstances. There is a government calculator which compares different types of childcare support here . Voucher schemes are no longer available to new applicants.
If your local authority assesses your disabled child as in need of services, such as a nursery place or short breaks (respite care), you can ask for DP and arrange services yourself. DP mean that you have much more flexibility.
All three and four year olds, and all two year olds on DLA, in England are entitled to 15 hours of free nursery education for 38 weeks of the year. Some other two year olds are also eligible. Details from your local Family Information Service.
Tax-free childcare is a government scheme that pays 20% of childcare costs. This involves parents setting up an account to which they contribute, and the government topping it up at 20% . The government tops it up to a maximum of £4000 a year for qualifying disabled children. You won’t be able to use Tax-free childcare if you get tax credits or Universal Credit. If you are in a childcare voucher scheme, you’ll be able to choose whether to continue with that or use Tax-free childcare. Voucher schemes are no longer available to new applicants.
Contact a Family http://www.cafamily.org.uk/ helpline: 0808 808 3555
For Family Information Services – see your local authority’s website or visit the Family and Childcare Trust
HM Revenue & Customs Helpline (for WTC claims) 0345 300 3900 – www.gov.uk
Professional Association for Childcare and Early Years (PACEY) – www.pacey.org.uk
This advice applies in England, Wales and Scotland. If you live in another part of the UK, the law may differ. Please call our helpline for more details.
If you have further questions and would like to contact our advice team please use our advice contact form below or call us.