Answers · UK 2025/26
How does the childcare element of Universal Credit work in 2026/27?
The Universal Credit childcare element refunds up to 85% of your registered childcare costs, up to a monthly cap of about GBP 1,031 for one child or GBP 1,768 for two or more children. You and any partner must normally be in paid work, and you claim the money back after you have paid the provider.
Full answer
The childcare element of Universal Credit helps working parents with the cost of registered or approved childcare. It pays back up to 85% of what you actually spend, subject to a monthly maximum of roughly GBP 1,031 for one child and roughly GBP 1,768 for two or more children. To qualify, you (and your partner if you have one) generally need to be in paid work, although there are exceptions during sickness, parental leave or while a partner is unable to provide care. Worked example: suppose you have two children and pay GBP 1,000 a month for an approved nursery. Universal Credit covers 85% of GBP 1,000, which is GBP 850 a month, well within the two-child cap. If your bill were GBP 2,200 a month, 85% would be GBP 1,870, but the payment would be limited to the GBP 1,768 cap. A key point is that the element is paid in arrears: you usually have to pay the provider first and report the cost, then receive the refund in your next Universal Credit payment, so you need cash flow to bridge the gap. The childcare element is added on top of your standard allowance and any child element, and is not reduced by the earnings taper in the same way as the rest of your award. Costs must be for Ofsted-registered or otherwise approved care. This is separate from Tax-Free Childcare and the free childcare hours scheme, and you cannot use Tax-Free Childcare at the same time as claiming Universal Credit. Use a budget planner to map your childcare cash flow, and check the current caps on GOV.UK.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.