Working Tax Credit childcare element

When calculating help with childcare costs through Working Tax Credit, people who pay for childcare in varying amounts over the year are allowed to work out their average costs by looking at what they spend over a whole year. This allows increases for short periods during school holidays to be taken into account when calculating the average. In some circumstances you can also claim just for a short period.

If you only use childcare at certain times, you can also calculate childcare costs on the basis of what you are likely to pay over the whole of the year. Our childcare costs calendar helps you work out the correct figure.

This information is not relevant for Universal Credit claimants as your help with childcare costs will be calculated based on the amount paid out during the assessment period rather than averaging across the year.

Help with short periods of childcare

Some people don’t normally use childcare but need it once in a while for short fixed periods. For example, during school holidays or to cover an emergency.

You can claim help with your costs just for the short time you need the childcare for. This means that the help for your childcare is worked out and paid over the short time you use the care. For this to happen:

• You must only use childcare once in a while – for example, only during the summer holidays or in an emergency, and
• Your childcare must be for a fixed period – this means you know when it will start and end.

Otherwise the help for your childcare through Working Tax Credit will be worked out and paid over 52 weeks and you should select the variable costs option on the Childcare page.

Please note that if you are claiming tax credits for the first time and want to claim help for a short fixed period of childcare, then you need to tell the Tax Credit Helpline that this is what you want to do.

Working Tax Credit childcare element - average childcare costs

When working out your average weekly childcare costs you should round your figures up to the nearest pound. For example, if the average weekly amount is £15.16 round up the amount to £16.00

If you have been paying for childcare for over a year (and your costs this year are broadly the same as in the last year) then you can calculate your average costs by taking the total amount paid for childcare in the last year. If it is less than 52 weeks since you started using childcare then average weekly costs are calculated by adding together what you expect to spend on childcare in the next year.

If your average weekly childcare costs change, or your estimate turns out to be wrong, then you should let the Tax Credit Helpline know straight away.

Working Tax Credit childcare element - further help

If you are unsure whether you can claim for your childcare arrangements or how to calculate your childcare costs, you can get more information from the HM Revenue and Customs' guide to tax credits and childcare.