Find out what help is available for childcare costs through Universal Credit

If you receive Universal Credit, and are working, then you may be able to claim back up to 85% of your childcare costs. In this article we explain what support there is for registered childcare costs through Universal Credit.

We also include information about a grant for upfront childcare costs that Universal Credit claimants in Northern Ireland can benefit from (through the Advisor Discretion Fund), enabling them to move into work, return to work from parental leave, or increase their hours of work.

At a glance

Universal Credit allows parents to claim back 85% of their eligible childcare costs for children under 16 (17 for children with disabilities). The most you can get each month is £646.35 if you have one child, or £1,108.04 if you have two or more children. As Universal Credit is means-tested, the amount you will actually receive will depend on your household income and circumstances.

To be eligible, parents must be working, but there is no minimum number of hours that have to be worked.

In some cases Universal Credit may not the best form of support for childcare costs. For more information on other forms of support, refer to the comprehensive factsheets available in the Factsheets section of our website, or speak to our Family Benefits Advice Service on 0800 028 3008 to find out what is best for you and your family.

What is Universal Credit?

Universal Credit is a benefit for people of working age, who are in or out of work. It has replaced Tax Credits as the main means-tested benefit for adults of working age. Universal Credit combines the previous means-tested support for adults of working age and their children into one benefit, and is intended to simplify the benefits system. If you are a lone parent, sick or disabled, a carer, unemployed or in low paid work and need help with living expenses, including your rent, the means-tested benefit you will claim will be Universal Credit.

Who can claim Universal Credit?

To claim Universal Credit, in most cases, you must:

  • be at least 18 years old
  • be under the qualifying age for Pension Credit
  • be in the UK
  • not be in full-time education
  • not have savings or capital over £16,000
  • have accepted a claimant commitment.

If you have a partner you will have to make a joint claim for Universal Credit.

There are some exceptions to these criteria, for example for students and 16 and 17 year olds who are lone parents, or couples where one meets the criteria and the other does not. You should always check with an independent advisor to ensure that you are not missing out on any support you may be entitled to.

For more detailed information on these criteria and how Universal Credit is calculated see our Universal Credit Factsheet.

Who can claim help with registered childcare costs through Universal Credit?

Support for childcare costs through Universal Credit (UC) is referred to as the childcare element of UC. To receive the childcare element of UC you must be in paid work, or have an offer of work starting before the end of your next UC assessment period. There is no minimum number of hours you need to work.

If you are part of a couple then both of you need to be working unless one is working and the other is unable to work or provide childcare due to:

  • having been assessed as having Limited Capability to Work
  • getting, or being entitled to get Carers Allowance
  • being temporarily absent from the household, such as in hospital or prison.

How much will you get?

The childcare element of UC is based on 85% of your registered childcare costs (up to £646.35 for one child and £1,108.04 for 2 or more children).

You must pay for your childcare up-front, before it can be included in your Universal Credit award. Once you have paid your childcare provider, and get proof of payment or receipts from the provider, you then must submit these receipts to Universal Credit by the end of the following assessment period and wait to be reimbursed.

You should receive the reimbursement included in your Universal Credit payment you receive after the end of the assessment period.

Case study

Hannah is a single parent with three children, all of whom are under the age of four. She works 25 hours a week, and has monthly registered childcare costs of £1,150. She is entitled to claim back 85% of her registered childcare costs through the childcare element of UC. Each month, she submits the receipt from her childcare provider and receives £977.50 included in her next Universal Credit payment.

Advisor Discretion Fund offers a non-repayable grant for initial upfront childcare costs

Parents in Northern Ireland who are receiving Universal Credit or other income-based benefits, can struggle to pay their initial childcare bill upfront when they are trying to move into work, return to work from parental leave, or increase their hours of work.

Registered childcare costs are often paid monthly in advance, usually at the start of the month. Many parents can struggle to afford this bill as it may have to be paid before they have received their wages, or sometimes even before they have started work.

The current Universal Credit system requires a parent to first pay their registered childcare bill, and then have a portion of these costs reimbursed. This can take up to six weeks.  By then, the parent will have had to make another payment to the childcare provider for the next month’s childcare bill, again paying these in advance before any financial support has been received.

This can mean that, for some parents, moving into work is simply not possible without going into debt or using savings. This barrier to employment has been recognised by the Northern Ireland Executive. Eligible parents can now claim help with upfront childcare costs in the form of a non-repayable grant through the expanded Adviser Discretion Fund (ADF).

Eligible parents who are in receipt of, or moving onto, Universal Credit can apply for support through the ADF to cover initial upfront childcare costs that are a barrier to:

  • starting work
  • working more hours
  • returning to work after maternity leave or other parental leave.

Key points:

  • This is a non-repayable grant of up to £1,500 for upfront childcare costs
  • The money is paid directly to a registered childcare provider
  • A receipt for the payment can be submitted to Universal Credit for the calculation of further entitlement.

For further information, and details about how to apply for this grant, read our article on the Adviser Discretion Fund or speak to a member of our Family Benefits Advice Service.

Further information

If you would like further advice on this help with childcare costs, or wish to find out more about what financial support you may be entitled to, contact our Family Benefits Advice Service for free, impartial and confidential advice. Call us on 028 9267 8200 or email – we are here to help.