Universal Credit for childcare and Tax-Free Childcare

Citizens Advice Scotland have a service called Help to Claim that specifically helps new claimants through the process, from working out whether you’re eligible right through to getting your first correct payment. If you’ve not claimed Universal Credit before, you can find out more about Help to Claim here. 

If you’re already claiming Universal Credit or you need help with any other money issues, you can get in touch with Citizens Advice Scotland’s Money Talk Team. They can help you find out what benefits you may be entitled to and how to save money on household bills. They can also advise on debt and other financial support available to families in Scotland.

Before you apply for Universal Credit, it’s a good idea to check whether you’ll be eligible using a benefits calculator. You can also talk to an adviser at the Money Talk Team or Help to Claim.

Even if you’re only entitled to a small amount of money, claiming Universal Credit can help you qualify for other benefits and payments, like the Scottish Child Payment and Best Start grants. And it also allows you to claim up to 85% of your childcare costs, up to a set limit.

If you already get other benefits, it’s a good idea to use a benefits calculator or talk to a money adviser, to help you work out if you can also claim Universal Credit.

Universal Credit is a payment to help with your living costs, including childcare and housing costs and costs if you have disability or care for someone. It’s paid by the Department of Work and Pensions (DWP). Here in Scotland it’s paid either monthly or twice a month – you can choose which. You may be able to get it if you’re out of work or can’t work, but you can also get it if you're working.

You may be able to get Universal Credit if you’re:

• out of work
• in work (including if you’re self-employed, full-time or part-time)
• unable to work, for example because of a health condition, because you care for someone, or because you're in the later stages of pregnancy or have a new baby. 

You must:

• live in the UK
• be aged 18 or over (or 16 and over if you're in the later stages of pregnancy or have a child)
• be under State Pension age
• have no more than £16,000 in money, savings and investments.

If you’re a full-time student or in training and you look after a child, you also may be eligible. 

If you live with your partner, you’ll need to make a joint claim for your household. You’ll be given one payment for the household.  How much you get will depend on you and your partner’s income and savings. Again, it’s a good idea to check how much you’ll get by using a benefits calculator or talking to a money adviser. 

If your partner isn’t eligible, it’s still worth checking if you can claim in your own right. Any savings or income your partner has will be taken into account.

You can find out more about eligibility on the gov.uk website, including what to do if you’re not a UK resident.

If you’re expecting a baby or on leave with a new baby, it’s worth checking again whether you can claim Universal Credit. It’s also a good idea to talk to a money adviser to work out what’s best for you. 

Many people’s incomes drop when they have a new baby, so you may be eligible now, even if you weren’t before. 

In addition, claiming Universal Credit means you can claim other payments too, like the Scottish Child Payment and Best Start grants.

The amount you get depends on your situation. You’ll be given a set amount for your household (called the ‘standard allowance’). This depends on your age and whether or not you live with a partner. You’ll also get extra for any children you have.

You may also get extra if:

• your child is disabled
• you have a disability or health condition
• you care for someone who gets a health or disability-related benefit
• you need help to pay your housing costs
• you pay for childcare – you can read more about this further down the page.

However, you may get money taken off depending on various things, including:

• how much you earn, if you work
• if you owe any money for things like council tax arrears or overpaid benefits
• if you have a certain amount of money, savings or investments.

You can claim Universal Credit at the same time as other benefits, but this may also affect how much you get.

You can find out more about how much you can get on gov.uk website and use a benefits calculator to help you work out how much you can get.

It usually takes around 5 weeks to get your first payment. If you need money while you wait for your first payment, you can apply for an advance.

The first thing you need to do when you apply for Universal Credit is create an online account. If you’re applying with your partner, they will need to create an account too, and you’ll then link the accounts together.

If you can’t create an online account, you can get in touch with the Universal Credit helpline and an adviser will help you apply.

There are 4 stages to applying:

1. Complete your ‘to-do list’ – this is a list of questions about your situation.
2. Confirm your identity – you can do this online or in person at your local Jobcentre.
3. Next you’ll be assigned a work coach, who can help you with things like training and job hunting. You’ll need to arrange an appointment with them to get things going.
4. Speak to your work coach at your local Jobcentre, through your online journal or on the phone. They'll check your details and agree what tasks you'll do regularly to get Universal Credit – this is called your ‘claimant commitment’.

You can find step by step information about how to apply and a checklist of things you’ll need to apply on the Citizens Advice Scotland website. It might all sound a bit complicated, but you don’t have to do it on your own – the Citizens Advice Help to Claim service can help you.

When you meet your work coach, you’ll need to agree on a ‘claimant commitment’. This is a record of what you agree to do to:

• prepare for and look for work, if you can
• increase your earnings, if you’re already working.

What’s in your claimant commitment will depend on things like pregnancy, how old your children are and whether you're disabled or have a health condition, or care for someone. You can talk all these things through with your work coach.

You can find lots of information to help you prepare for your interview with your work coach on the Citizens Advice Scotland website. You can also get help preparing from Help to Claim. 

The amount of Universal Credit you get is calculated each month based on your work, money and family situation. So if things change – for example, if your income changes, or you start a new job, have a baby or move in with or split up from your partner – you need to report it straightaway, to make sure you get the correct payment. 

This means it’s really important to stay on top of any changes, and report them as soon as you can, to make sure you’re getting the right amount of Universal Credit. If you’re not sure whether a change affects your benefits or not, it’s best to report it anyway, to be on the safe side. 

If you’re paid by your employer through PAYE (‘Pay as you earn’) you don’t have to report any changes to your pay, as this will be reported automatically. If you’re employed full-time, part-time, or in a temporary job, this probably applies to you. If you’re not sure, have a look at your payslip as it will say ‘PAYE’ on it.

If you’re self-employed, you’ll need to report your income every month.

You can find out more about this on the gov.uk and Citizens Advice Scotland website.

You may get messages from the DWP about your Universal Credit account. For example, you might be asked to send information or get text reminders about appointments. It’s really important not to ignore these messages. 

If you’re not sure whether a message is real or a scam, you should always log into your account rather than replying or clicking on any links. The DWP will never ask you to send information like bank details or passwords via text or email.

Universal Credit can pay up to 85% of your childcare costs, up to a set limit. This includes holiday clubs, after school clubs and breakfast clubs. If you live with a partner, you both need to be working, unless your partner can’t look after your children. This could be the case if your partner is disabled or has a health condition, cares for somebody else who’s disabled, or is away from home, for example, in hospital.

It doesn’t matter how many hours you and your partner work – there’s no minimum – and you can claim for all your children, until they’re 16.

You may also be able to claim if you’re on sick leave, or maternity, paternity, neonatal, parental or adoption leave.

You can apply in your online account, or you can talk to your work coach, who can help you. You can also get help from the Money Talk Team.

You usually have to pay for your childcare costs yourself first. When you’ve paid, you need to report the payment in your online account as soon as possible, in the same way you report any changes to your situation. If you pay for childcare on a monthly basis you might want to set a reminder in your phone to report it when the payment goes out. You’ll need to show some proof of the payment, for example, an invoice or receipt from your childcare provider.

You can claim up to 3 months of future childcare costs at a time if you have paid these costs up front already, and you have proof of those costs. However, you’ll only get the money back with Universal Credit after the childcare actually happens. So for example, if in June you pay in advance for a holiday club for July and August, Universal Credit will usually pay you back for the July childcare in July and the August childcare in August.

You might be able to get help if you have to pay childcare costs upfront and one of the following applies:

• you’re starting work
• you’re increasing the hours you work, for example, you’ve moved from part-time work to full-time work.

This means that if you start work or increase your hours, you don't have to find all the money for childcare first, before you’ve been paid.

If you’re starting a new job you may be able to get all your childcare costs paid for the first month. 

You may also be able to get help if you need to pay a deposit or retainer to your childcare provider.

Universal Credit can pay for lots of different kinds of childcare, including nursery, childminding, nannies, playgroups, holiday clubs, after school clubs and breakfast clubs, as long as they’re registered with the Care Inspectorate. So for example you can’t claim for babysitting by a friend unless they’re a registered childminder. 

You can search for childcare providers and after school and holiday clubs on the Care Inspectorate website to check if they’re registered. Try searching under 'Child Care Agency', 'Child Minding' and 'Day Care of Children'.

It sounds complicated, but you don’t have to work it out on your own. You can get help from an adviser at the Money Talk Team.

You can find out more about Universal Credit for childcare costs on the gov.uk website.

Not every family will qualify for Universal Credit – but that doesn't mean there's no help available. If you’re ineligible for Universal Credit, you may still qualify for Tax-Free Childcare. Tax-Free Childcare is a separate government scheme that allows eligible working parents to save money on childcare costs. 

If you qualify for Tax-Free Childcare, you’ll need to set up a childcare account, which both you and the government will pay into. For every £8 you put in, the government adds £2 – up to £2,000 per child per year (or £4,000 per year if your child is disabled). 

You can then use this money to pay your childcare provider. Your childcare provider will also need to be signed up to the Tax-Free Childcare scheme, and they need to be registered with the Scottish Care Inspectorate. Your provider can confirm if they have signed up to the scheme, and you can search for registered providers on the Care Inspectorate website. (Try searching under 'Child Care Agency', 'Child Minding' and 'Day Care of Children'.)

• You can find out more about Tax-Free Childcare on the gov.uk website.
• If you’re not sure which funding support you're eligible for, an adviser at the Money Talk Team can help you work it out.