0330 113 5212
9am - 5pm Monday - Friday

Benefits of Using Childcare Tax Credit You are Entitled to

Childcare can be a real headache for many parents. There are those who cannot afford to give up work to care for their children and others who do not want to put their careers on hold during the early years before their kids start school. The alternative solution to these conundrums is childcare, and although there are many options in terms of getting someone to take care of a child, the cost can be a problem for many people.


The overall cost of childcare can eat a huge chunk from a family’s income and some find that they just end up working to pay their childcare provider. Fortunately, the Government has introduced a number of schemes designed to help keep parents in work. With help towards the cost of childcare payments, more people can continue working, safe in the knowledge that they can access financial support to help them meet these important payments. So, what is this help that is available?


Well, did you know that there is a childcare element of working tax credits that you may be entitled to? This article aims to discuss the benefits of using the childcare tax credit that you are entitled to. Many people are confused about the fact that they can claim help with childcare costs and believe that because they are working, they will not be entitled to any help. The reality is that for many of these schemes, you must be in work to be eligible. They are, after all, designed to help working parents.


What is Working Tax Credit?


Working tax credit is a payment that is designed to help those on a low income. However, childcare tax credit is an extra amount that can be claimed to help you cover the costs of your childcare bill. Although the basic amount that is claimed is up to £1,960 per year, you could get more if you are paying towards approved childcare.


Working tax credit is made up of the basic amount described above, and then possible extra payments depending on circumstances. The elements are as follows:



  • A couple applying together can get up to £2010 per year

  • A single parent can get up to £2010 per year

  • Those working for thirty hours or more per week can claim up to £810 per year

  • Those who have a disability can claim up to £3,000 per year

  • Those who have a severe disability can claim up to £1,290 per year as well as their disability payment

  • Those paying for approved childcare can get up to £122.50 for one child per week or up to £210 per week for two or more children.


What is Approved Childcare?


To qualify for childcare tax credit, you will need to be paying for approved childcare. But what does that mean?


Approved childcare is provided by the following:



  • A childminder who is with a registered childminding agency

  • A registered nursery, playgroup, childminder, or club

  • A registered school

  • A care worker who is with a registered home care agency.


You can also get help towards your childcare costs if you are paying for early years childcare that is provided by a school and your child is under the age of five. If your child is over the age of five and you are paying for childcare in a registered independent school, or another school if childcare is provided on the premises outside of normal school hours, you may also be eligible for help.


In England and Scotland, if your child is being looked after by a relative who is a registered childminder and who is taking care of your child outside of your home, then you may also be able to get help towards their payment. You can get help if you are paying using the childcare tax credit, childcare vouchers, or universal credit.


If you live in Wales, your relative must also be taking care of another child that is not related to you in order for you to claim help towards the cost of paying them.


Am I Entitled to Childcare Tax Credit?


As universal credit is being rolled out as a replacement to working tax credits, you can only make a new application if you live in an area where universal credit is not in place or if you or your partner are eligible for pension credit.


Eligibility for working tax credit and childcare tax credit depends on a number of circumstances. For example, your age, number of hours you work, your income, or your individual circumstances will affect your eligibility.


If you have children, you must be over sixteen to apply for working tax credits. If you do not have children and you are not disabled, you cannot apply until you are twenty-five.


There are a certain number of hours that you need to work in order to qualify. If you are aged between twenty-five and fifty-nine, you must work at least thirty hours per week. You must be working at least sixteen hours a week if you are aged sixty or over, are disabled or are single with one or more children. Couples with one or more children must be working at least twenty-four hours together with one person working a minimum of sixteen hours. Children must be sixteen or under unless they are in approved education, in which case they can be twenty or under.


If you are a couple with one or more children, there are exceptions to the twenty-four hours working requirement. If you are disabled or over the age of sixty, you may be able to claim working and childcare tax credit if you work sixteen hours per week. You may also be able to claim the allowance for sixteen hours per week if your partner is unable to work due to disability or ill health or if he or she is in hospital, prison, or entitled to claim carers’ allowance.


In terms of your income, different rules will apply depending on your circumstances. A couple without children will not be entitled to working tax credit if they earn £18,000 or over. A single person cannot earn more than £13,100 if he or she does not have children. However, the income limits are higher for those with children and for those with a disability.


How Much Will I Get?


To work out how much childcare tax credit you are entitled to, only £175 per week of your childcare costs will be considered if you have one child. If you have more than one child, payments of up to £300 per week will be considered.


The amount you will be awarded will be seventy per cent of your childcare bill or seventy per cent of the maximum allowance, whichever is lowest. This means that the most you can claim is £122.50 for one child or £210 for two or more children. How much you pay will depend on your income and you may therefore get less than seventy per cent of your costs.

We use cookies to enhance your experience, please accept our cookies policy I Accept