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The rules relating to the childcare element of Working Tax Credit allow parents
who pay for childcare in varying amounts over the year to work out their
average childcare 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.
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.
More guidance on how to work out your average weekly costs is below. If your
average weekly childcare costs change, or your estimate turns out to be wrong,
then you may have to report a change of circumstance. However, this only
applies if your average weekly child care costs change by £10 a week or
more. If your weekly costs change by less than £10 a week the change is
ignored.
If childcare is paid weekly and is the same amount each week
The average weekly costs are calculated by adding together the weekly costs for
the last four weeks and dividing the total by four.
If childcare is paid weekly and different amounts are paid at different times
The average weekly costs are calculated by taking the total amount paid for
childcare in the last 52 weeks and dividing that by 52 (including increases in
costs during school holidays and it can include weeks when nothing was paid for
childcare). If it is less than 52 weeks since the parents started using
childcare then the average weekly costs are calculated by adding together what
the family expects to spend on childcare in the next 52 weeks and dividing that
by 52.
If childcare is paid monthly and is the same amount each month
The average weekly costs are calculated by multiplying the amount paid in the
last month by 12 and dividing the total by 52.
If childcare is paid monthly and different amounts are paid at different times
The average weekly costs should be worked out by taking the total amount paid
for childcare in the last 52 weeks and dividing that by 52 (this would include
taking account of any increases in costs during the school holidays and it can
include weeks when nothing is paid for childcare). If it is less than 52 weeks
since childcare started then the amount expected to be spent on childcare in
the next 52 weeks should be calculated and then divided by 52.
When working out your average weekly childcare costs you should round up to the
nearest pound. For example, if the average weekly amount is £15.96, round up
the amount to £16.00
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
HM Revenue and Customs' guide to tax credits and childcare.
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