Tax credits and £0 childcare costs during lockdown

[GravityFalls]

I’m on tax credits and get a small amount although I have a decent salary as I’m a single parent with high childcare costs (wraparound care for two primary children as I work full time and commute). My childcare provider isn’t operating or charging during school closures so obviously for the time being my childcare costs are £0, but I don’t know whether to inform tax credits now or when we go back so I can work out the yearly average properly. I’m not intending on keeping the money - I’m currently putting tax credit payments in a separate account while schools are closed so I’ll be able to pay it all back - but when I am making childcare payments I do need the cash so I really don’t want my tax credits account to be closed or to have to switch to UC. In my experience they’ve never been very bothered about me informing of changes later than the rules say, they just take over payments out later or bump them up if I’ve been underpaid, so I’m not worried about getting in trouble. I just don’t see how I can give them an accurate figure if I don’t know when we’re going back.

I've changed my child care costs to £0 for now, as I'd rather have an extra payment than owe them money. However, I receive WTC, CTC and help with childcare costs. I'd stick with what you are doing if it means you might be forced to switch to UC otherwise. Just keep the money separate and be prepared to pay it back when they ask for it! Such a stressful time!

You have to tell them within a month.

I enter the costs online a couple of days before every school holiday, then put it back to £0 when they are back at school.

Op what does your award say is there any amount at all that is child tax credits rather than working tax credits for childcare costs?

"for the time being my childcare costs are £0, but I don’t know whether to inform tax credits now or when we go back so I can work out the yearly average properly."

Obviously you should notify them now that you are no longer paying for childcare.
When you start paying for childcare again you can notify them of that.

www.litrg.org.uk/tax-guides/coronavirus-guidance/coronavirus-childcare-support-and-benefits-children
See point number 5.

Well, it’s not obvious, because I don’t want them to cancel my tax credits claim altogether. It’s never been £0 before as I work out the average over the year - I don’t use childcare in the holidays but I know how many weeks that will be so it’s easy to do. So usually I’d just work out a new average and claim for that but I can’t as I don’t know how many weeks this will go on for. I can’t put that my childcare costs will be zero as they’re not going to, over the whole year. If I usually did as the poster above does and alter them at different periods that would make sense but I’d already taken zero cost periods into account when making my claim.

@GravityFalls No you only average your costs over the year when you have current cost of at least £10. You can’t average them for the future when your costs are zero. You risk a £300 fine and if you weren’t entitled your claim would end anyway. As I said earlier what is your child tax credit amount that is not wtc for childcare.

Also it’s now a brand new tax year so previous averages for the year are irrelevant.

It's actually up to the tax credits office to work out averages and so on. You are supposed to report your childcare costs with as much accuracy as possible. So you should tell them the dates that your childcare costs are £x (plus the amount obviously) and the dates that your childcare costs are £0. In the current situation you can tell them that your costs are currently £0 but they will increase to £x when the schools/childcare providers reopen.

HMRC are kind of working it out as they go along at the moment, but the latest updates are that people on WTC have an 8 week grace period when they can continue to claim even if they are not working at the moment (due to coronavirus) and that 8 week period may or may not be extended. So with that in mind you will be able to continue claiming even if your current circumstances make you ineligible. The tax credits office will know that you will be paying childcare costs again and will therefore be eligible for tax credits in the overall period 2020-21.

When you are claiming tax credits (or other benefits) you are required to report certain changes in circumstances, and this is a change that you must report.

Not reporting for fear that your tax credits will stop is a risky strategy and it's how people can end up getting fined (I'm not saying that you will necessarily, just that it's a flawed logic).

Another thought. You might actually be better off on Universal credit. On tax credits, you get up to 70% of childcare costs paid for. On UC, it's 85%. And UC can be more generous for working people because a decent chunk of earnings are disregarded before deductions are made.

Anyway, not the question you asked (!), but it might just be worth doing a better off calculation to check.

I receive less than £10 a week for childcare and online wouldn't let me remove it myself. I contacted them via chat and was told they had to remove it as he isnt attending childcare at the moment, which is fair enough. They said as soon as its needed again to let them know and they will reinstate it

I phoned tax credits as soon as schools shut as my childminder was stopping and I was starting to work from home. They didn’t change me to uc and said to just phone them when it restarts.

My nursery are still charging but have reduced fees 50% from 1st May.

I was planning to report the drop in fees of course but now I'm worried that the fact DD isn't actually attending might mean I'm not eligible any more even though nursery are still charging.

No you will be eligible as long as you are paying and are invoiced.

Stay as you are OP as long as you know you will have an overpayment. You don’t want to change to UC when the costs start again. UC pay childcare in arrears and you have to wait 5 weeks for payment. The reason they pay 85% is because they are less generous than tax credits overall.

UC has many flaws compared to tax credits when you are employed that a better off calculation doesn’t address.

I disagree, UC has advantages and disadvantages compared to tax credits, and whether it's advisable to switch depends on individual circumstances. For some people UC is actually more generous (for some it's not, of course). A better off calculation is a good starting point.

I agree a better off calculation is a starting point and individual circumstances matter. Clearly if the OP could get proper advice at this time she would have a clearer picture but she asked on here and this is a general forum, so on the balance of probabilities, it would be better staying put.

There are too many unknowns, what is her pay frequency, does she pay rent? Particularly as the OP said it is for child care costs only, where despite the 85% it is quite possible to get a nil award on UC where Tax Credits would contribute.

UC has many drawbacks and childcare costs and switching claims are two of them.

Has anybody been affected by short term childcare that WT used to pay and adjust your payments for Easter holidays (short term care). I called them and the way they work childcare costs out is the weekly cost divided by 52 weeks a year. Essentially it’s not worth while sending your child to play scheme as they won’t cover ANY of the costs as this would work at under £10 a week based on how they have worked it out over the year. Also when they do pay they spread the cost weekly for the duration of the year.

@march20 I work during school hours so don't use regular childcare.
When it is half term and holidays I send mine to a club, I go onto my online tax account and put in that from x date - x date my childcare costs will be x amount.
I pay it upfront to the provider as you can only put it in a week in advance and tax credits reimburse me 70% of the amount in one lump sum.

They say on there that you can average your yearly amounts or just add it by dates as and when you need it. I do it this way as some half terms I have help from family so don't need it all the time.

They won't allow you to pay it back, they'll take it from future payments.
That's what they told my friend anyway.
We have tc but not childcare and I was told the same when informing them of changed hours/pay in the past.
Use the saved money for living expenses when they take the amout from future payments.

@AvoidingRealHumans that’s exactly what I usually do add on when I need childcare. WT usually do the same for me like your saying. Apparently they have changed the rules a few months ago. I’m going to be a lot worse off with how it al works out now... I won’t be able to afford to pay full costs just for she term care. I will call back again to double check & see if they can sort it as it’s their errors in the first place. Thanks for the info too

I've been wondering about this.
I paid for breakfast and after school club until Easter so I know I have a month before I need to change anything. But as the government have closed schools I was wondering if there is any need to change my claim yet. Will read up.

Sorry just in case anyone reads this and it may be useful. WTC made an error & are short staffed due to what’s going on... you can add your childcare on and then they will update your claim on a weekly basis! I was told wrong info.