The Department for Work and Pensions (DWP) has confirmed the rules on childcare costs for working parents on Universal Credit, clarifying that holiday club fees must be paid up-front and are reimbursed in the month the childcare is provided.
The update follows a parliamentary question from Rebecca Smith, Conservative MP for South-West Devon, who asked the DWP about 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.
How Universal Credit childcare support works
Working parents who pay for childcare while at work can receive help with costs through Universal Credit. This includes holiday clubs, as well as breakfast clubs and after-school clubs. If a claimant lives with a partner, both need to be working, unless the partner cannot look after the children.
Claimants must pay for the childcare up-front. Once paid, they can report the costs to the DWP, and Universal Credit can pay some of the money back.
Minister's response to MP's question
Sir Stephen Timms, minister of state at the DWP, replied on Thursday, October 15, explaining the rules. He said: “The Government is committed to ensuring working families can access the childcare support they need.
“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.”
Official guidance on claiming costs
The government’s dedicated web page on the subject explains that you can only get money back after the childcare happens. The DWP says if you pay for it after it has been provided, it usually pays back costs in the same monthly assessment period in which the cost is reported.
Official advice is that working parents should try to arrange monthly payments with their childcare provider. Parents are advised to report costs as soon as they are paid. Officials say this should mean childcare costs are included in Universal Credit every assessment period. Yet it notes that you may also be able to claim for previous childcare costs if you paid for them in your current assessment period.
The government website also notes: “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.”
To apply for support with childcare costs if you are a working parent on Universal Credit, visit the government’s web page on the topic.
