Understanding Childcare Support with Universal Credit: A Guide for Parents

by Kids Inc Nurseries | 31 May 2024 | Blog

As a parent, managing childcare and work commitments can be a real challenge. Universal Credit is designed to help those low-income or out-of-work, and it can provide a significant amount of assistance with childcare costs for working parents. If you’re starting work or are already in paid employment and claim Universal Credit, you could be eligible for help with your childcare expenses. In this guide, we explore the specifics of childcare payments through Universal Credit (UC), eligibility, and additional support options.

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Understanding Childcare Costs under Universal Credit

Dealing with childcare costs can feel like a maze, right? Let’s clear up one crucial part: when does Universal Credit actually reimburse you for those childcare expenses? Here’s the simple breakdown:

Childcare First, Then Claim: You’ll first need to pay for your childcare. Once that’s done and the care has been given, you can then make a claim to Universal Credit for reimbursement.

How Much Can You Get Back for Childcare Costs, and How Does Your Income Affect It?

Universal Credit can provide up to 85% of your childcare expenses. However, the amount you receive isn’t just a flat rate; it’s influenced by both a cap on the reimbursement amount and your monthly earnings. 

Maximum Reimbursement Limits Based on Your Family Size:

The amount that Universal Credit reimburses for childcare expenses is capped monthly, and this cap depends on the number of children you have:

  • For families with one child: The reimbursement can go up to £950.92 each month.
  • For families with two or more children: This cap increases to £1,630.15 per month.

These figures represent the upper limit of what can be reimbursed, covering up to 85% of incurred childcare costs.

The Influence of Your Earnings:

Your Universal Credit payment, including the childcare cost component, isn’t static. It adjusts according to your earnings. Here’s what that means for you:

  • Higher Earnings, Lower Universal Credit: If you have a month where your earnings are higher than usual, you might find that your overall Universal Credit payment, including the childcare contribution, is reduced. This adjustment is part of Universal Credit’s design to gradually decrease support as your ability to self-support increases.

Who is Eligible for Childcare Costs on Universal Credit?

Eligibility for childcare cost support through Universal Credit is designed to be inclusive for working parents. Here’s a quick overview:

  • Single Parents: If you’re a working single parent, you’re typically eligible.
  • Couples: In a two-parent household, both must be in paid employment to qualify. However, there are exceptions. For instance, if one partner cannot work due to disability or has caring responsibilities, you could still be eligible.

Managing Upfront Childcare Costs

Many parents face the hurdle of the initial upfront expenses of childcare. However, there is support available:

Flexible Support Fund (FSF)

The purpose of the FSF is to aid parents entering the workforce or increasing their working hours by covering the initial childcare costs. This is particularly useful for parents transitioning to a new job or moving from part-time to full-time employment.
You can apply for FSF through the Universal Credit online account or by contacting your work coach directly. Your work coach plays a key role in determining your eligibility, taking into consideration factors such as the registered status of your childcare provider, the reasonableness of the childcare costs in your local area, and other potential sources of childcare support.

FSF Payments are Non Repayable

One of the key advantages of the FSF payment is that they do not need to be repaid, easing the financial burden on parents.

Learn about fsf payments (PDF)

Budgeting Advance

A budgeting advance is a loan for people on Universal Credit. You pay it back through smaller Universal Credit payments. When you get this loan, your regular Universal Credit will be reduced until you repay the loan. The government will inform you about the reduction in your payments.
To apply, contact your local Jobcentre Plus. You’ll need to explain your need for the loan and your repayment plan.
Repayment starts from your next Universal Credit payment. If you stop getting Universal Credit, you must repay the loan in another way, like from your salary or other benefits.
You have to repay the loan within a year. The minimum loan amount is £100, but if you have children, you can borrow up to £812.

Contact Information and Resources

Navigating childcare support through Universal Credit can be complex. We’ve compiled a list of essential resources and contact points to assist you. These resources can provide further guidance, answer specific questions, and offer support in applying for and managing your benefits.

Universal Credit Helpline

  • Universal Credit Helpline: 0800 328 5644
  • Operating Hours: Monday to Friday, 8am to 6pm

Money Advice Service

Citizens Advice

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