Tax Credits: Who can claim

Claimants can get help with their childcare costs through the childcare element of working tax credit (WTC). The childcare element is largely covered by Regulations 13-16 WTC (Entitlement and Maximum Rate) Regulations 2002. Although normally paid to the main carer alongside child tax credit (CTC), it is part of WTC and therefore has various work conditions attached to it.

Who can claim childcare?

AND

Note that the exception from the requirement for a couple to both work 16 hours in relation to those entitled to carer’s allowance was introduced from 6 April 2012. However, as this change was announced close to 6 April 2012 was not  widely publicised. If advisers do find that claimants have missed out as a result, it may be possible to argue for the additional childcare to be paid under the official error regulations.

What does ‘incapacitated’ mean for childcare purposes?

It is important to note that being ‘incapacitated’ is different to qualifying for the disability element of WTC. The meaning is set out in Regulation 13(5)-13(8) WTC EMR Regs 2002. One member of the couple must be working at least 16 hours and one of the benefits/credits listed below must be payable in respect of the other member:

Under the last bullet point, linked periods can include any periods of:

If the claimant is in hospital, but would be getting severe disablement allowance, DLA, PIP, AFIP, AA or an increase of disablement pension if they were not, they will still qualify.

What are relevant childcare charges?

Relevant childcare charges are costs that are incurred for qualifying childcare. They are calculated in a very specific way, which is covered in more detail in our calculating childcare section.

Not all childcare costs are counted as relevant childcare charges. Only certain types of childcare, those which are registered or approved, count. HMRC produce a childcare guide called WTC 5 which sets out a full list of qualifying childcare (see pages 3-6). For that reason we have not reproduced it here.

One point to note is that the definition of childcare changed substantially in July 2009 which meant that some providers who were registered or approved prior to that date were no longer approved after that date. If tax credits continued to be claimed on non-qualifying childcare after that date it would likely lead to an overpayment. More information is available in an article written by the Low Incomes Tax Reform Group at the time of the changes.

Some childcare, even though registered or approved, will not count if it is specifically excluded by the legislation. This includes certain childcare provided by relatives. Of particular note:

In these cases relative means parent, grandparent, aunt, uncle, brother or sister whether by blood, half blood, marriage or civil partnership or affinity.

Also excluded is care provided by a foster parent, a foster carer or kinship carer in respect of a child whom that person is fostering or looking after as the child’s kinship carer. Any charges paid in respect of a child’s compulsory education or paid to or by a partner in respect of a child they are responsible for are also excluded.

What is a child for childcare purposes?

The definition of a child for childcare purposes is different to that for CTC. Childcare is only payable for children until:

Who is responsible for a child?

Childcare costs can only be claimed for a child whom the claimant (or their partner) are responsible for. This has the same meaning as responsibility for CTC purposes and briefly means that:

the child or young person is not:

More information about the responsibility test can be found in the HMRC tax credits technical manual

Updated 23 May 2016