IMPORTANT: Where the claimant's UC award includes a Transitional Element - the inclusion of or increase to the Childcare Costs Element should NOT erode it.
Already entitled and has a change in circumstances that affects entitlement
If a claimant stops work for the reasons shown below, or if their childcare hours change, for example due to school holidays, their childcare costs are treated as follows:
Off work sick - employee
If a claimant is off work sick and claiming Statutory Sick Pay they are treated as still being in paid work, so any Childcare Element included in their UC award would continue - assuming they continue to meet the payment and notification conditions.
Note: Statutory Sick Pay is treated as earnings and not as a benefit for Universal Credit, so if they are entitled to a Work Allowance it will continue to be applied while they receive Statutory Sick Pay.
Off work sick - self employed
If a claimant is self-employed and therefore not entitled to Statutory Sick Pay then the DWP need to make a decision as to whether they are ‘gainfully self-employed’.
They will continue to be entitled to a Childcare Element in their UC award as long as the DWP considers them to be ‘gainfully self-employed’ - assuming they continue to meet the payment and notification conditions.
If the DWP no longer considers them as ‘gainfully self employed’ then they will be entitled to a Childcare Element for the Monthly Assessment Period in which their ‘gainful self employment’ is considered to end, plus for the following Monthly Assessment Period.
On maternity/paternity leave
If a claimant is off work on maternity or paternity leave and claiming either Statutory Maternity Pay, ordinary or additional Statutory Paternity Pay, Shared Parental Pay, Statutory Adoption Pay, Statutory Neonatal Care Pay or Maternity Allowance, then they are treated as still being in paid work and any Childcare Element included in their UC award would continue - assuming they continue to meet the payment and notification conditions.
Note: these benefits are treated as earnings and not as benefits for Universal Credit, so if they are entitled to a Work Allowance it will continue to be applied while they receive any one of these benefits.
If work ends
If the claimant finishes work, they can qualify for the ‘childcare run-on’, so any Childcare Element included in their UC award would continue for the Monthly Assessment Period in which they finish work and for the following Monthly Assessment Period - assuming they continue to meet the payment and notification conditions.
Starting a new job after a short gap
If a claimant starts a new job and it begins before the end of the Monthly Assessment Period after their previous job ends, then any Childcare Element included in their UC award would continue - assuming they continue to meet the payment and notification conditions.
If a claimant starts a new job after the end of the Monthly Assessment Period after their previous job ended then, subject to all the rules on paying for and notifying the childcare, they will begin to receive the Childcare Costs Element again starting from the Monthly Assessment Period in which they start their new job.
Changing provider
It does not matter if two different providers have provided childcare during any Monthly Assessment Period- as long as the work condition and the childcare costs are satisfied; it is the total amount paid which is taken into account.
Childcare hours change
Provided the claimant has reported the changes within the Monthly Assessment Period in which they fall (or have satisfied the rules for late reporting of these changes - more here) and the new childcare costs are not considered by the DWP to be excessive the DWP should include a Childcare Costs Element taking account of the higher childcare costs, subject to the limits imposed on childcare charges.
Note: the Advice for Decision Makers guidance for DWP decision makers at chapter F7 advises decision makers to take account of an increase in childcare costs due to school holidays, particularly where the child is/children are of a young age and/or have a disability.
Example 1
Margaret is off sick from work and her employer pays her Statutory Sick Pay. As she is still treated as being in paid work as long as she meets both the payment and notification conditions, her UC award continues to include a Childcare Costs Element as normal.
Example 2
Fatima was self-employed but became unable to work at all due to ill health and closed her business on 12th June. The DWP considers her to no longer be in gainful self employment from that date. Fatima’s Monthly Assessment Period runs from the 10th of each month and ends on the 9th of the following month. She will be entitled to have a Childcare Costs Element included in her UC award for the Monthly Assessment Periods 10th June to 9th July, plus 10th July to 9th August (assuming she meets both the payment and notification conditions).
Example 3
Ahmed is made redundant on the 20th May. His Monthly Assessment Period runs from the 5th of each month to the 4th of the following month. He will be entitled to have a Childcare Costs Element included in his UC award during the Monthly Assessment Periods 5th May to 4th June and 5th June to 4th July. He gets a new job on 30th June for the same hours. As this date is within the Monthly Assessment Period following the ending of his previous job Ahmed can continue to have a Childcare Costs Element included in his award with no interruption (assuming he meets both the payment and notification conditions).
Example 4
Sandra has 2 children, aged 6 and 8. She will have extra childcare requirements during the school Easter holidays, which last 2 weeks and which fall within one of her Monthly Assessment Periods. She reports and verifies the increase in her childcare costs on time and the amount of the Childcare Cost Element included for the Monthly Assessment Period increase to take account of her increased childcare costs.
The Regulations
Regulations 31 to 35 of the Universal Credit Regulations set out how childcare costs are to be treated.
Regulation 64 of the Universal Credit Regulations sets out the definition of ‘gainful self employment’. A Universal Credit claimant is said to be in gainful self employment, where
(a) the claimant is carrying on a trade, profession or vocation as their main employment; and
(b) their earnings from that trade, profession or vocation are self-employed earnings; and
(c) the trade, profession or vocation is organised, developed, regular and carried on in expectation of profit.