New parents confused about universal credit

Duck86

Hi I'm just looking for advice or any experience of receiving the childcare contribution via unversial credit for our first child.

For the past few years we've saved to help the nursery/childminder costs for when my wife goes back to work (we don't have family who can help). We thought we were doing the right thing but now realise that savings can drastically reduce the amount of universal credit we recieve to help with childcare.

I understand about the 30 free hours the term after the child turns 3 and aware some 2 year olds get funded spaces.

After doing the benefits calculator (excluding savings) it said we would receive - £480 every 4 weeks to help with the nursery costs.

This was based on our wages of £820 & £1395 a month after duductions and a private Nursery setting which costs £190 a week.

Our savings of just over 6k mean it may be affected so tempted to spend those on something we need for the child to help us get the full entitlement when the time comes, but don't want to blow those savings unneccesarily if it turns out we're then not entitled to UC for some reason or the government suddenly changes things again.

We've also heard people have trouble claiming their benefits and that some childcare providers hold up the process of they don't give out reciepts etc in a timely manner.

We're just generally confused about the whole process and so if anyone can explain how it works we'd be grateful!

Rubyroobs

Any savings over 6k will reduce your Uc entitlement by £4.35 for every £250 over the 6k. UC is paid as a monthly amount once a month not every four weeks. The 30 hours free childcare is not part of Uc. Uc will pay 85% of your childcare costs up to a certain amount and this is just another element of Uc which is added to any other entitlements - you will get a couples element, childrens element and rent element if you rent. Then wages reduce your total UC amount. If your savings are only just over 6k there would likely be only a very small deduction on your UC amount. It is only if savings are over 16k that you would have no UC entitlement.

Rubyroobs

Rubyroobs wrote: »

Any savings over 6k will reduce your Uc entitlement by £4.35 for every £250 over the 6k. UC is paid as a monthly amount once a month not every four weeks. The 30 hours free childcare is not part of Uc. Uc will pay 85% of your childcare costs up to a certain amount and this is just another element of Uc which is added to any other entitlements - you will get a couples element, childrens element and rent element if you rent. Then wages reduce your total UC amount. If your savings are only just over 6k there would likely be only a very small deduction on your UC amount. It is only if savings are over 16k that you would have no UC entitlement.

I should also add that any Uc entitlement depends on wages reported in your monthly Uc assessment period and what childcare is reported in your assessment period. If either of you are paid weekly or four weekly then this will mean variable earnings in your UC assessment period which will affect the amount of help you get.

Alice_Holt

I'd not be concerned with savings of just over £6k. As Rubyroots has explained savings below £6k are ignored.
https://www.entitledto.co.uk/help/Savings-and-other-capital-overview-Universal-Credit

I think it very sensible to have built up an emergency fund.
It is also helpful as UC childcare support is paid in arrears. This means that you will usually pay the costs yourself, and Universal Credit will then pay you some of that money back. (So, if just over £6k you may fall under that cut-off when you make the childcare payment)

These sites may be useful:
https://www.understandinguniversalcredit.gov.uk/new-to-universal-credit/children-and-childcare/
https://www.gingerbread.org.uk/information/childcare/childcare-options-youre-getting-universal-credit/
https://www.entitledto.co.uk/help/Childcare-overview-Universal-Credit
https://www.gov.uk/government/publications/universal-credit-and-childcare/universal-credit-childcare-guide

If you are not already in receipt of UC there is a 5 week waiting period. Again that may eat into your savings.

tacpot12

If you have any debts that you are legally liable for, you could look to pay off some of this debt with your savings in order to get below £6,000 at the point you claim UC.

Mrsn

On the practical side of how it works so to speak this our experience. We pay for our childcare costs upfront each month and then submit a copy of paid invoice via the online system. They will also accept bank statements showing the payment to the childcare provider. Sometimes we have had issues where the evidence hasn’t been accepted in time in the assessment period so have had delays waiting to recoup the costs but does eventually get sorted...

Duck86

Thank you for the help everyone. All answers have been very helpful!

Theres a chance my wife is going to recieve around £10k inheritance soon (before we start claiming, it's in probate) so we're a bit concerned that this may impact our entitlement. We wondered about paying off a bit of our mortgage to put the money to good use, but don't want to find ourselves in trouble somehow for doing that with the money and then claiming UC shortly down the line?

As we earn lowish wages, we would prefer to use the money to secure our house further and ensure there is something for the child to inherit in the future, rather than it disappearing straight away on childcare at £800 a month...

Alice_Holt

Duck86 wrote: »

Thank you for the help everyone. All answers have been very helpful!

Theres a chance my wife is going to recieve around £10k inheritance soon (before we start claiming, it's in probate) so we're a bit concerned that this may impact our entitlement. We wondered about paying off a bit of our mortgage to put the money to good use, but don't want to find ourselves in trouble somehow for doing that with the money and then claiming UC shortly down the line?

As we earn lowish wages, we would prefer to use the money to secure our house further and ensure there is something for the child to inherit in the future, rather than it disappearing straight away on childcare at £800 a month...

Reducing the mortgage would not be viewed as deprivation of capital by UC, So you shouldn't find yourself in trouble.

"“UC Regulations 2013
Notional capital
50 (2) A person is not to be treated as depriving themselves of capital if the person disposes of it for the purposes of—
(a)reducing or paying a debt owed by the person; or
(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the person’s case.”