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Wednesday, 3 October 2023

Childcare changes - effect on Working Tax Credit

If you're claiming help with your childcare costs, tell the Tax Credit Office straight away about any changes to your childcare. For example, a different childcare provider, costs going up or down, getting vouchers from your employer or help with your costs from the local authority.

Your childcare provider stops being approved or registered

You must tell the Tax Credit Office if any of the following applies to your childcare provider:

  • they have lost their registration or approval
  • they decide not to renew their registration or approval
  • their registration or approval has run out - you must tell the Tax Credit Office even if they have applied to renew their registration

Ask your childcare provider how you can keep up to date with any of these changes. For example your provider may regularly need to renew their registration with Ofsted or approval under a Childcare Approval Scheme.

Check what date it runs out and ask to see the new proof of their approval or registration.

It's important that you tell the Tax Credit Office about these changes within one month. If you don't you could be paid too much money and have to pay it back. You may also have to pay a penalty of up to £300.

You change your childcare provider

If you change to another childcare provider who isn’t registered or approved

Tell the Tax Credit Office immediately if your new childcare provider is not registered or approved for tax credits purposes. For example, if you start using a relative for childcare, it won't usually count for tax credits purposes - even if they are registered.

You must report the change within one month at the latest. If you don't tell the Tax Credit Office on time, you could build up an overpayment which you have to pay back. You could also be charged a penalty.

If you change to another registered or approved childcare provider

You should tell the Tax Credit Office if you change to a different registered or approved childcare provider. They'll need to know your new provider's registration or approval number.

The amount of tax credits you get won’t usually be affected if all your other circumstances stay the same.

The Tax Credit Office may need to contact your childcare provider from time to time to make checks. If they are unable to contact your provider, they may stop paying you the extra Working Tax Credit for your childcare.

Changes to your childcare costs

If your childcare costs go down or stop

You must work out your new average weekly childcare costs in the same way that you did when you made your original claim.

For help working out your average weekly childcare costs, you can follow the link below or call the Tax Credit Helpline.

You must tell the Tax Credit Office within one month if:

  • you normally pay fixed weekly childcare costs and your actual costs go down by £10 a week or more - and the change applies in each week for four weeks in a row
  • you pay the same amount every month or different amounts for childcare at different times, for example, you pay more in the school holidays than you do during term time and your new average weekly costs go down by £10 or more
  • you stop paying childcare costs

If this happens, your tax credit payments are likely to go down if all your other circumstances stay the same.

If you don't tell the Tax Credit Office within one month, you could build up an overpayment which you have to pay back. You might also have to pay a penalty of up to £300.

If your childcare costs go up

You must work out your new average weekly childcare costs in the same way that you did when you made your original claim.

For help working out your average weekly childcare costs, you can follow the link below or call the Tax Credit Helpline.

It is important to tell the Tax Credit Office straight away if:

  • you normally pay fixed weekly childcare costs and your actual costs go up by £10 a week or more - and the change applies in each week for four weeks in a row
  • you pay the same amount every month or different amounts at different times and your new average weekly childcare costs are at least £10 more than your current costs

If you pay a fixed weekly amount for childcare, and the amount is about to change, you don't have to wait. You can tell the Tax Credit Office at the start of the first week of the change. But make sure first of all that you are sure that it will last for at least the next four weeks.

If your childcare costs go up and all your other circumstances stay the same, you may be able to get more money. Your payments will go up from the first week of the change as long as you report the change within one month of it happening. This is because any increase to your payments can only be backdated by up to one month.

You get help from someone else towards your childcare costs

You should tell the Tax Credit Office immediately - and at the latest within one month - if any of the following applies:

  • your employer gives you cash or childcare vouchers towards the cost of your childcare
  • your employer gives you childcare vouchers in return for a reduction in your pay - this is called a 'salary sacrifice'
  • your employer provides a free or subsidised nursery place
  • your local authority or education authority pays any of your childcare costs, for example early learning or nursery education if your child is under five
  • you get help through student childcare grants
  • you get any other government funding towards your childcare costs, for example if the Department for Work and Pensions pays any of your costs to help you start work

If this happens, your tax credits are likely to go down if all your other circumstances stay the same.

If you do not report the change, you could be overpaid tax credits which you will have to pay back. You may also have to pay a penalty of up to £300 if you delay in reporting the change.

How to report childcare changes

You can report changes to your childcare arrangements by calling the Tax Credit Helpline or writing to the Tax Credit Office.

You can't email or report changes online for tax credits.

Provided by HM Revenue and Customs

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