Benefits Owl is a member of          Addventures logo
‘Can you explain tax credits to me?’:
The Childcare Element

Just because you are have childcare costs it doesn’t follow that you are entitled to help with it.

You're entitled if you are one of the following:
Even then, you can’t get help unless the childcare is ‘relevant childcare’, which basically means that the person has to be approved by the government to do this work. If you’re not sure if this applies to you seek further advice.

Even then, you can’t get help if the children you are getting childcare for are too old: if you’ve got to the first 1st September after the child’s 15th birthday they are too old, unless they are classes as disabled, in which case it is the first 1st September after the child’s 16th birthday.

icon-warning1.jpg If you get Childcare Vouchers from your employer you cannot use them for your childcare element. You may need to seek advice, as deciding between the two can be tricky

How to work out the amount of your childcare element

icon-warning1.jpgI've taken some shortcuts here to make things easier to understand. If you use this approach you answer may not be exactly correct, but it will give you a good idea of what to expect.

(Note: the government has not increased these rate for the year 2016-16)

icon-example1.jpgLet’s look at Toni again. She has to pay an average of £340 per week for the childcare for her three children.
  • The yearly amount would be about £17,729 (340 divided by 7 and multiplying by 365)
  • Because this is more than £15,643, Toni has to pretend the £17,729 is £15,643
  • Her childcare element is therefore about £10,950 (70% of £15,643)

icon-warning1.jpgRemember that, like everything else to do with tax credits, your initial award is based on the estimate that you give them, but your final award is based on what the childcare actually costs you, so you could end up with an overpayment if you overestimate your childcare costs. Legally you are obliged to tell them within a month if your childcare costs go down by more than £10 per week or stops altogether. See my page on tax credit overpayments here for more information