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?

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Coronavirus and childcare

We are awaiting confirmation from HMRC regarding the position for WTC claimants who get help with childcare costs. Those who are in qualifying remunerative work and who continue using childcare (because they are key-workers) and therefore incurring costs can continue claiming the childcare element. If the claimant has lost their job (been made redundant) or stopped trading as a self-employed person and no longer meet the qualifying remunerative work test for the childcare element, then they will no longer be able to claim help with childcare costs.

A number of tax credit claimants are working (or treated as working their normal hours under the new coronavirus-related tax credit rules) and unable to send their children to their usual childcare provision but they are expected to keep paying fees or to pay retainer fees. It is not clear what the position is in relation to the WTC childcare element for those people and for anyone claiming tax credit help with their childcare costs in these circumstances, we recommend contacting HMRC directly for advice, making a note of the date, time and advisers name and the advice given. That advice should be followed until HMRC publish further information.

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.

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

Last reviewed/updated 26 May 2020