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?

Where a person is entitled to WTC, there is entitlement to the childcare element if:

AND

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.

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:

What are relevant childcare charges?

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:

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.

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

Last reviewed/updated 25 April 2022