Increase in Universal Credit childcare support confirmed
During his first Spring Budget on 15 March 2023, Chancellor Jeremy Hunt announced an increase to help with childcare costs for families on Universal Credit.
Through Universal Credit, families can claim back up to 85% of their registered childcare costs. This is a vital form of support for working parents but, since its introduction, the maximum monthly limits under Universal Credit have remained the same at £646.35 for one child or £1,108.04 for two or more children.
The Department for Work and Pensions (DWP) has now confirmed that from 28 June parents in Great Britain will be able to claim back increased amounts towards their childcare costs of:
- £951 per month for one child
- £1,630per month for two or more children.
This is an increase of 47%, compared to the current maximum amounts and will be a huge help to working parents who have seen their childcare bills significantly rise in recent years, in addition to other cost of living pressures.
The Chancellor had also committed, in the Spring Budget, to increase these figures in line with the Consumer Price Index each year until 2027/28, however there is no further confirmation regarding this.
What about the other forms of Childcare support?
There are no equivalent increases for parents receiving support for childcare costs outside Universal Credit.
Working Tax Credit: The maximum support remains at 70% of the maximum weekly limits of £175 for one child and £300 for 2 or more children.
Tax-Free Childcare: The maximum support remains at 20% of childcare costs up to a maximum of £2,000 per child per year.
This increase in support available through Universal Credit may mean that it is more financially beneficial than other forms of support. However we strongly advise that any parents considering making a new claim for Universal Credit, especially if they are already receiving another form of support such as Tax Credits, gets independent advice before moving to Universal Credit, as they will be unable to move back to the original form of support, even if they find they are worse off in the future on Universal Credit.
For further information
The Family Benefits Advice Service provides free, impartial and confidential advice to parents on the financial support their family is entitled to and can help work out what is the best form of support in for your household circumstances. To speak to an advisor call Freephone 0800 028 3008 or email hello@employersforchildcare.org.
