Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
, see all updates

Eligibility - childcare element (WTC): Childcare element of WTC (Introduction)

This section covers the conditions for claims where entitlement to the childcare element of Working Tax Credit (WTC) needs to be taken into account in the calculation of tax credit awards.

The childcare element of WTC is added to the basic element and any other elements of WTC the customer is entitled to, where the customer or partner

  • is incurring relevant childcare charges

or

  • have entered into an agreement for the provision of childcare which will start in the next seven days and will incur relevant childcare charges during the period of the award

and, is either a

  • lone parent
  • member of a couple where both are in remunerative work

or

  • member of a couple where one member is in paid work and the other is incapacitated, in hospital, in prison or entitled to Carer’s Allowance, this means they either:

    • get paid Carer’s Allowance

    or

    • qualify for Carer’s Allowance but do not actually get any payments as they receive other benefits instead.

Note: The Carer’s Allowance exception only applies from 6 April 2012.

From 6 April 2004 parents who are absent from work because they are on childbirth leave or adoption leave will be eligible to claim the childcare element for their new children from the child’s date of birth or the date the children are placed for adoption with them.

From 06/04/2011 the maximum rate of the childcare element of WTC is 70% of the relevant childcare costs incurred by the customers, subject to a weekly maximum limit of £175 for one child and £300 for two or more children. Applying the 70% taper to those maximums results in a maximum available credit of £122.50 for one child and £210.00 for two or more children.

Note: Prior to 06/04/2011 the childcare element of WTC was calculated at 80% of the relevant childcare costs incurred by the customers subject to the maximum limits.