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?
- What does ‘incapacitated’ mean for childcare purposes?
- What are relevant childcare charges?
- What is a child for childcare purposes?
- Who is responsible for a child?
Where a person is entitled to WTC, there is entitlement to the childcare element if:
- The claimant is a lone parent engaged in qualifying remunerative work (16 hours per week or more); or
- The claimant is a couple one or both of whom are responsible for a child or young person and they are both engaged in qualifying remunerative work (at least 16 hours per week each); or
- The claimant is part of a couple where one person is engaged in qualifying remunerative work (of at least 16 hours per week) and the other is either incapacitated, a hospital in-patient, in prison or is entitled to carer’s allowance (from 6 April 2012).
The claimant is incurring relevant childcare charges for a child for whom the claimant (or their partner) is responsible. Here, charges incurred for childcare are charges paid by the claimant (in a joint claim, by either or both claimants) for child care provided for any child for whom the claimant (either claimant) is responsible.
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:
- housing benefit with a disability premium, or a higher pensioner premium;
- housing benefit with a childcare earnings disregard because the other member is ‘incapacitated’ under the HB regulations
- disability living allowance (DLA);
- personal independence payment (PIP)
- armed forces independence payment (AFIP)
- attendance allowance (AA);
- severe disablement allowance;
- increase of disablement pension under Section 104 Contributions and Benefits Act 1992;
- incapacity benefit at the short-term higher rate or the long-term rate;
- industrial injuries benefit with constant attendance allowance;
- war disablement pension with constant attendance allowance or mobility supplement;
- a vehicle under the Invalid Vehicle Scheme;
- Scottish disability assistance;
- Any benefit, allowance or credit of an EEA state or Swtizerland which is substantially similar to the UK benefits in this list;
- contributory employment and support allowance (CBESA) or a limited capability for work credit (from 1 May 2012) where entitlement to that allowance, that credit, statutory sick pay (SSP) or short term higher rate incapacity benefit, long term incapacity benefit or severe disablement allowance has existed for a period of 28 weeks comprising one continuous period or two linked periods (provided that, if the person received statutory sick pay, they also met the relevant contribution conditions);
Under the last bullet point, linked periods can include any periods of:
- CBESA providing they were no more than 12 weeks apart
- SSP as long as they were no more than 8 weeks apart
- CBESA after receiving SSP as long as they were no more than 12 weeks apart
- CBESA after receiving short term higher rate or long term incapacity benefit or severe disablement allowance as long as they were no more than 12 weeks apart.
Relevant childcare charges are costs that are incurred for qualifying childcare - charges incurred for childcare are charges paid by the claimant (in a joint claim, by either or both claimants) for child care provided for any child for whom the claimant (either claimant) is responsible. 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.
Some childcare, even though registered or approved, will not count if it is specifically excluded by the legislation, or it does not involve the provision of care of a child. This includes certain childcare provided by relatives. Of particular note:
- If a relative is a registered childminder and looks after the child in their home (rather than the child’s own home) the childcare will qualify. If the care is provided in the child’s home, even if the relative is a registered childminder, it is excluded childcare.
- If the relative is an approved childcare provider under the Home Childcare Providers Scheme in Northern Ireland or Wales, the childcare can be qualifying providing that it is provided outside of the child’s own home and the relative also cares for at least one other non-related child.
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.
HMRC say that the childcare element of WTC cannot be used to help with the costs of online tuition. This is because they do not regard online tuition as providing any element of care and the childcare element can only be claimed where the claimant is incurring and paying charges for childcare. The rules say that childcare means care provided for a child. HMRC updated their guidance on GOV.UK to confirm this on 14 February 2022.
HMRC have told us their view is that where face to face tuition includes providing care for the child as well as tuition, it can be regarded as childcare. However, online tuition is tuition only and does not involve providing care for the child. However, the rules for childcare support in other schemes may be different, for example online tuition may be covered by the tax-free childcare scheme in certain situations.
From the start of the COVID-19 pandemic until 7 September 2020, HMRC operated a concession to help tax credit claimants whose children were not able to attend their usual childcare setting but who still had to pay the costs. Whether the provider was able to offer an online replacement is irrelevant for the purposes of the concession. From 8 September 2020, this concession was withdrawn because most childcare providers were able to re-open.
We have published information about dealing with overpayments and how to challenge decisions by HMRC about online tuition on the main LITRG website.
The definition of a child for childcare purposes is different to that for CTC. Childcare is only payable for children until:
- 1st September following the child’s 15th birthday;
- 1st September following the child’s 16th birthday if the child is on a blind register (or came off in the 28 weeks before the claim for childcare) or the parents receive DLA or PIP or AFIP for the child (or would do so but for the child being a patient in hospital).
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 'normally lives with you' (the 'normally living with' test - see below);
- if the child or young person normally lives both with you and with another person (for example their other parent from whom you are separated or divorced), you have 'main responsibility' for them ('the main responsibility test' - see below); and
the child or young person is not:
- being looked after by the local authority, or
- in custody, or
- receiving tax credits for a child of their own, or
- receiving incapacity benefit for himself or herself (see 'other rules about responsibility for a child' below) or receiving working tax credit in their own right.
More information about the responsibility test can be found in the HMRC tax credits technical manual.
Last reviewed/updated 25 April 2022