HB childcare earnings disregard where student gets childcare grant
We’ve been contacted by a lone parent (in England) who works and gets child tax credit and working tax credit including a childcare element. She also gets HB and her calculation includes an additional childcare earnings disregard. She is thinking of starting an open university undergraduate degree course which she will do alongside her employment.
As well as maintenance loan she expects to get a childcare grant.
I can see from CPAG’s student support and benefits handbook that you cannot get a childcare grant at the same time as the childcare element in WTC. She would prefer to get the grant as this covers a higher % of costs and is also disregarded as income for benefits purposes.
What I’m not sure about is whether her HB calculation still includes an additional childcare earnings disregard where she is getting help with her childcare costs via the grant rather than via the WTC childcare element? I am hoping it does but need to confirm.
The only grant that would prevent a claimant from getting a child care disregard would be a sports award, because this has the effect of the claimant being treated as not in remunerative work. Otherwise, as long as the claimant is in remunerative work (min 16 hours a week) and is paying/incurring child care fees, they qualify for HB the disregard.
Some councils might try to argue that the claimant is not personally paying or incurring the childcare costs for HB purposes if they are covered by a grant. There might be something in that if the grant is paid directly to the childcare provider without the claimant personally handling it. A similar argument is sometimes made about childcare vouchers obtained under a salary sacrifice scheme. I’m not aware of these arguments ever having had an airing at UT level.
Peter’s argument that if the grant is not being paid directly to the provider then the claimant should still be entitled to the disregard is backed up by para. 2.398 here.
Looking at the “How you’re paid” section here, I’m not sure whether that would be treated as the grant being paid directly to the provider or not.
If they are not entitled to the disregard in HB, it may be more worthwhile claiming for the childcare through tax credits, as that together with the HB disregard (and possibly a disregard for a CTR claim too), may mean they’ll be better off.
That’s interesting, I didn’t realise that was how the grant got paid - very similar to a personal budget for care services. The grant itself is certainly disregarded as grant income by Reg 59(2)(h), but I think it does raise a question as to whether these are costs “incurred” and “paid” by the claimant for the purpose of the earnings disregard in Regs 27 and 28
Thank you both, that’s really helpful.