The Department for Work and Pensions has clarified how childcare costs are reimbursed for working parents on Universal Credit, following a request from an MP for an explanation of the rules.
The update, issued by DWP minister Sir Stephen Timms, confirms that working parents who pay for childcare while in employment may be entitled to financial assistance through Universal Credit. This covers breakfast clubs, after-school clubs, and holiday clubs.
For claimants living with a partner, both must be in work, according to official government guidance, unless the partner is unable to care for the children. However, the process still requires Universal Credit claimants to meet childcare costs upfront.
How the reimbursement process works
Once payment has been made, claimants can report their costs to the DWP, at which point Universal Credit can reimburse a portion of the costs. The issue was brought into focus after Rebecca Smith, Conservative MP for South-West Devon, sought clarification from the DWP on the rules for those using holiday clubs, reports the Mirror.
She asked whether the DWP "has assessed the potential impact of Universal Credit childcare cost attribution rules on working parents required to pay school holiday club fees more than three assessment periods in advance."
Sir Stephen Timms, minister of state at the DWP, replied on Thursday, October 15 to explain the rules for parents. He said: "The Government is committed to ensuring working families can access the childcare support they need."
Advance payment rules explained
"Universal Credit is assessed on a monthly basis, with entitlement determined according to a household's circumstances in each assessment period. This approach allows awards to reflect changes as they occur and supports the accurate calculation of entitlement."
"We recognise that some childcare providers require advance payment, which is why customers are able to report childcare costs up to three months in advance. However, childcare costs are reimbursed in the month the childcare is provided. This balances support for customers who pay for childcare in advance, while ensuring reimbursement is linked to childcare that has actually taken place."
"In addition, the Department for Education's Holiday Activities and Food programme provides support to children from low-income families during school holiday periods."
Guidance for claimants
The government's dedicated webpage on the matter says that funds can only be reclaimed once the childcare has taken place. The DWP says that if payment is made after the childcare has been provided, costs are typically reimbursed within the same monthly assessment period in which they are reported.
Official guidance advises working parents to try to set up monthly payment arrangements with their childcare provider. Parents are also encouraged to report costs as quickly as possible once payment has been made.
Officials say this should ensure childcare costs are incorporated into Universal Credit during every assessment period. However, it is also noted that you may be entitled to claim for previous childcare costs, provided they were paid within your current assessment period.
In line with Sir Stephen's guidance on future childcare payments, the government website explains: "You can also claim up to 3 assessment periods of future childcare costs at a time if you have paid these costs up front already, and you have proof of those costs. This includes the assessment period in which you pay the childcare costs. We pay these costs back over the assessment periods for which they apply. They will not be paid back in one lump sum."
Working parents claiming Universal Credit who want to apply for assistance with childcare costs can do so by visiting the relevant page on the government's website.
