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HMRC internal manual

Claimant Compliance Manual

Particular Aspects: Child Care - Calculating Average Weekly Child Care Charges (Prior to 6 April 2003)

The initial award of the child care element is based on the customer’s average weekly child care charges. The method used for calculation of childcare costs changed from 6 April 2003. It is important that you can recognise whether the customer has calculated childcare costs according to the old or the new rules. The rule of thumb to follow is that where the claim was submitted prior to 6 April 2003, the childcare costs would have been calculated on the old basis and claims completed after that date should be in accordance with the new Regulations, although this is not a given.

The main changes to the calculation affect those who pay their childcare costs weekly, but in varying amounts. Prior to 6 April 2003, childcare costs would have been calculated as follows:

  • Customers paying childcare weekly - calculated their costs on the basis of the last 4 weeks childcare paid (then dividing by 4), unless they have just entered into agreement with the provider, in which case an estimate of the weekly costs can be used
  • Customers paying childcare monthly - calculated their average weekly costs (to enter on the claim form) either on the basis of the last month’s payment, if their costs are fixed, or by averaging over a year if costs are variable

The Regulations also allowed for a customer to calculate childcare costs on any reasonable basis if they do not have enough information to calculate using one of the methods shown above, for example, if they have just entered into an agreement with the provider.