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HMRC internal manual

Tax Credits Manual

Eligibility - childcare element (WTC): childcare - calculating weekly charges (Info)

Where childcare charges are paid in a fixed weekly amount, the relevant childcare charges are calculated by averaging the weekly charge paid for each child and rounding the charge up to the nearest whole pound. The customer should calculate the charges using the most recent four consecutive weeks.

Where charges are paid in a fixed monthly amount, the weekly amount is calculated by multiplying the monthly charge by 12 and dividing the total by 52.

Where childcare charges are only incurred during school holiday periods, the weekly charges are calculated by adding together all the payments made during the previous 52 weeks and dividing that figure by 52. Any changes to short term childcare charges must be calculated in the same way.

Where childcare charges are variable calculations depend on how long the current childcare arrangement has been in place.

If the customer is reporting childcare charges where they have been using the same childcare provider for more than 12 months without the costs changing the weekly cost is calculated by totalling the amounts paid over the previous 12 months and dividing the total by 52.

If the customer is reporting childcare charges where they have been using the same childcare provider for less than 12 months or where the average weekly costs have changed in the last 52 weeks the average weekly cost should be calculated using future costs. The customer should calculate the total amount they expect to pay over the next 52 weeks and divide this total by 52 to arrive at an average weekly cost.

Where the customer is reporting a change to their childcare costs they should calculate their new average weekly cost. If the new weekly costs have changed by £10 or more a week from the figure they previously provided they need to inform us of the change and action should be taken to update the customers claim following the guidance in TCM0032160.

Where the childcare costs cannot be calculated using fixed weekly, fixed monthly, variable weekly or variable monthly methods as detailed above, HMRC will estimate the childcare charge in accordance with information provided by the customer who is incurring the charge using any method which in the officer’s opinion is reasonable.

Where the customer has entered into an agreement for childcare and they will under that agreement incur charges no later than seven days from the date of claim for the childcare element, the average weekly charge for childcare is based upon a written estimate of the future weekly charges provided by the customer.

Note: The relevant charges are always a weekly amount.