Parents on Universal Credit will be able to get £100s more in help with childcare costs from 28 June – here's what you need to know
Parents on Universal Credit with high childcare costs will soon be able to claim £100s more in support each month, as the Government is boosting the help available from Wednesday 28 June. In addition, some of those eligible will also be able to get one month's childcare paid for them upfront, instead of having to pay the full cost and getting it reimbursed later.
Both measures were announced earlier this year as part of the childcare package in the Chancellor's March Budget – and the Government has now confirmed the date the changes will come into effect.
Below we explain what's happening and what the changes mean for you. If you're not currently getting any benefits, use our 10-minute benefits checker to ensure you're not missing out on vital support. You can also read our Childcare costs guide for full info on how to make sure you're getting all the help you're entitled to.
From 28 June, the maximum amount you can claim for childcare costs via Universal Credit is increasing by £100s each month
Currently, parents on Universal Credit who are in work can claim back up to 85% of their childcare costs – but there are caps on the total amount you can claim. These caps mean you might get less than 85% of your costs back.
From Wednesday 28 June, you'll still only be able to claim up to 85% of your costs, but the caps will increase as follows:
- For one child: The maximum amount will rise from £646 to £951 a month.
- For two or more children: The maximum amount will rise from £1,108 to £1,630 a month.
The change will benefit those whose costs are greater than £760 a month for one child, and £1,304 a month for two or more children – that's because the current caps mean you cannot claim the full 85% of your total costs.
For example, if you have one child and your childcare costs are £1,000 a month, right now you can only claim up to £646 a month (just under 65%). However, from Wednesday 28 June, you'll be able to claim the full 85% and get £850 a month, as that will be under the new monthly cap of £951.
You may not get the higher amounts straightaway
It's worth noting that, depending on when your Universal Credit assessment period ends, you may not be able to get the new amounts immediately. For example, if your assessment period runs to the 27th of the month, then your new one will begin on the 28th and you will have to wait until this assessment period has finished to get the new raised amounts.
If you're claiming Universal Credit for the first time, you'll get the higher amounts in your first assessment period (after the standard five-week wait has elapsed).
If you are entering work or 'significantly' increase your hours, you can get upfront help
Right now the system pays childcare costs in arrears. This means claimants must pay the full costs themselves before applying for reimbursement after the care has taken place. This has been seen as a major obstacle for many low-income families, as finding £100s in upfront costs can be extremely difficult. From Wednesday 28 June, for the first time, a portion of childcare costs will be paid upfront.
However, upfront payments will only be available to those who are entering work or "significantly increasing" their hours of work. The exact number of hours deemed significant is up to the discretion of your work coach – the Department for Work and Pensions told us there is no minimum number of hours but that work coaches may expect at least a few more hours of work every week.
Those who cannot get a month's costs paid up front (for example, because their increase in hours is not deemed significant) will still be able to claim in arrears.
To start the process of getting your first upfront payment, speak to your work coach – you can do this in person or using your online journal.
Childcare isn't changing for those who get Working Tax Credits
There are no changes to the provision of childcare for those who claim Working Tax Credits. If you pay for approved childcare and receive Working Tax Credits you can currently claim up to £122.50 a week for one child, and £210 a week for two or more children.
Some may be better off switching to Universal Credit as a result of the changes but make sure you carefully research this first, as once you've switched you cannot reverse this decision – see our Universal Credit guide for full info.