Universal Credit
Getting childcare costs back through Universal Credit
You pay the nursery or childminder, report the bill, and most of it comes back in your next payment.
Checked by Radif Partners · Editorial policy · How we calculate
Universal Credit pays back up to 85 % of what you spend on childcare while you work. In 2026/27 the most it adds in one monthly assessment period is £1,071.09 for one child and £1,836.16 for two or more children, whatever the number above two. You qualify if you are in paid work, or starting a job within the next month; in a couple both partners must work, unless one has limited capability for work, is eligible for Carer’s Allowance or is temporarily away, for example in hospital. There is no minimum number of hours. The childcare must be registered, with Ofsted in England, the Care Inspectorate in Scotland or Care Inspectorate Wales, and can be a nursery, childminder, nanny, breakfast or after-school club or holiday club, for children up to the 31 August after their 16th birthday. You normally pay first, then report the costs with proof in your account, and the refund arrives in your normal payment. Universal Credit cannot be combined with Tax-Free Childcare.
Childcare paid back through Universal Credit
Added to your award
£807.50
| 85% of the bill | £807.50 |
| Monthly cap | £1,071.09 |
| Left for you to pay | £142.50 |
The cap in practice
The refund is the lower of 85 % of what you paid and the cap for your family. Because the cap is a monthly figure, the bill at which it starts to bite is £1,260.11 for one child and £2,160.19 for two or more; above that, every extra pound is yours to pay.
| Monthly childcare bill | One child: refund | Two or more: refund |
|---|---|---|
| £400 | £340.00 | £340.00 |
| £800 | £680.00 | £680.00 |
| £1,200 | £1,020.00 | £1,020.00 |
| £1,600 | £1,071.09 | £1,360.00 |
| £2,400 | £1,071.09 | £1,836.16 |
The cap for two or more children was £1,768.94 in 2025/26 and £1,031.88 for one child. Three or four children in care do not raise it further.
A worked month
Jo is 31 and brings up two children alone. She takes home £1,500 a month and rents from a housing association for £700. Without childcare her Universal Credit would be £1,142.63. In the month she pays £1,100 for nursery and an after-school club, 85 % of that, £935.00, is added to the maximum, and her award rises to £2,077.63. Her own share of the bill is £165.00. The refund is not tapered by her wages: it is added before the 55 % earnings deduction, so the whole £935.00 reaches her as long as her award does not fall to nil.
Small jobs count too
Because there is no hours test, a parent working a short shift pattern qualifies as fully as one in a full-time post. Sam works two mornings a week, takes home £400 a month and pays a childminder £320 for those mornings. Her pay is below the lower work allowance of £427, so it costs her no Universal Credit at all, and the childminder bill brings an extra £272.00 into her award. Her net cost of childcare is £48.00 a month, which leaves her clearly better off for working those hours.
Who counts as working
GOV.UK’s childcare guide asks that you, and your partner if you have one, are in paid work or have a job starting within the next month. Hours do not matter: a few hours of paid work a week is enough. Where one partner does not work, the couple still qualifies if that partner:
- has a health condition or disability giving limited capability for work, with or without work-related activity;
- is eligible for Carer’s Allowance; or
- has to be away from home temporarily, for example in hospital.
If the job ends, report it. Costs for a settling-in period before work starts, or while you change your work pattern, can also be covered.
What childcare counts
The provider must be registered with the regulator for its nation: Ofsted in England, the Care Inspectorate in Scotland or Care Inspectorate Wales. Nurseries, childminders, nannies, breakfast clubs, after-school clubs and holiday clubs can all qualify if registered. Ask the provider for its registration number before you sign up, because the DWP asks for it as evidence. Children are covered up to the 31 August after their 16th birthday, which brings in summer holiday clubs for secondary school pupils.
Timing: why the refund can lag a month
The rules let you report costs paid in the current assessment period or in the one before it. Anything older cannot be claimed, which makes a forgotten invoice the most common way to lose a refund. When you pay ahead, the refund follows the care rather than the payment: a £900 bill paid in July for the next three months of care comes back in three slices, one in each of the periods in which the care takes place. Reporting on the day you pay, with the invoice uploaded at the same time, keeps the refund in step with the bill. Your statement lists the childcare amount separately, so a missing month is easy to spot.
Universal Credit or Tax-Free Childcare
You cannot open a Tax-Free Childcare account while you or your partner claim Universal Credit. Tax-Free Childcare adds 25 % to what you pay into its account, up to £500 a quarter per child, so the government covers 20 % of the bill; Universal Credit covers 85 %. If you switch, GOV.UK advises waiting for the Tax-Free Childcare decision before cancelling Universal Credit. For most families entitled to any Universal Credit, staying on it gives more help with childcare as well as with living costs. Families whose award is small may compare the two with the Tax-Free Childcare calculator, remembering that closing a Universal Credit claim can end other help, such as free school meals.