Targeted childcare entitlement

Official government guidance | Legislation

Program description¶

Overview¶

The targeted childcare entitlement (also known as the 2-year-old offer) provides 15 hours of free childcare per week for eligible 2-year-old children. The entitlement totals 570 hours annually and it delivered across 38 weeks. This program specifically targets families who meet certain income or benefit criteria.

Eligibility requirements¶

Age criteria¶

Children must be exactly 2 years old - not younger or older. Once a child turns 3, they transition to the universal or extended childcare entitlement programs.

Benefit-based eligibility¶

Families qualify if they receive any of these benefits:

• Income Support

• Income-based Jobseeker’s Allowance (JSA)

• Income-related Employment and Support Allowance (ESA)

• Pension Credit (Guarantee Credit)

The regulations require the parent to be entitled to the guaranteed element of State Pension Credit. Entitlement needs the claimant to have attained the qualifying age (State Pension Credit Act 2002 s.1(2)(b)), excludes a couple whose other member has not (s.4(1A)) unless SI 2019/37 art 4 saves them, and needs a claim (Social Security Administration Act 1992 s.1). PolicyEngine counts Pension Credit when the family receives a guarantee credit: the claimant has reached State Pension age, and so has any partner unless the couple is saved by SI 2019/37 art 4; the family claims Pension Credit and is paid it; and its guarantee credit is positive. A working-age family therefore never qualifies through Pension Credit in the model, even when its income is below the minimum guarantee, and nor does a pensioner who does not claim it. A mixed-age couple qualifies when the model treats it as saved by SI 2019/37 art 4, which it infers from reported Pension Credit or pension-age Housing Benefit unless the saving is set directly. The model does not distinguish entitlement from payment. In law they can differ, for example where a credit of under 10p a week is not payable (SI 2002/1792 reg 13).

Eligibility conditions¶

Families may also qualify based on income thresholds if they receive:

• Universal Credit with earned income of £15,400 or less per year (combined for a couple), as Universal Credit calculates it: earnings after the person’s own tax, National Insurance and pension contributions, and before the work allowance (uc_earned_income_before_work_allowance)

• Tax Credits (Working Tax Credit or Child Tax Credit) with household income of £16,190 or less per year

Geographic scope¶

The program applies only to families living in England. Scotland, Wales, and Northern Ireland administer their own early education systems.

Implementation¶

The targeted childcare entitlement program is implemented through several interconnected components:

1. Parameter definition¶

Located in parameters/gov/dfe/targeted_childcare_entitlement/, key parameters include:

• Program eligibility:

  • age_eligibility.yaml: Defines the eligible age (2 years old)

  • qualifying_benefits.yaml: Lists qualifying benefits

  • qualifying_criteria.yaml: Specifies additional eligibility conditions

• Income thresholds:

  • income_limit/tax_credits.yaml: Sets £16,190 threshold for Tax Credit recipients

  • income_limit/universal_credit.yaml: Sets £15,400 threshold for Universal Credit recipients

• Entitlement specifics:

  • hours_entitlement.yaml: Defines 570 annual entitlement hours

  • childcare_funding_rate.yaml: Sets funding rates by age

2. Benefit-based eligibility assessment¶

Managed in targeted_childcare_entitlement_eligible.py:

• Checks if family resides in England

• Verifies receipt of qualifying benefits defined in qualifying_benefits.yaml

• References additional qualifying criteria for means-tested benefits

Example table:

3. Benefit eligibility¶

Benefit eligibility is implemented in separate files for different benefit programs:

Universal Credit criteria¶

Universal Credit criteria is handled by meets_universal_credit_criteria_for_targeted_childcare_entitlement.py:

• Verifies UC receipt by checking if benefit amount is greater than zero

• Compares earned income against £15,400 threshold

• Returns boolean eligibility determination

Example table:

Tax Credits criteria¶

Managed by meets_tax_credit_criteria_for_targeted_childcare_entitlement.py:

• Checks for either Child Tax Credit or Working Tax Credit receipt

• Compares applicable income against £16,190 threshold

• Returns boolean eligibility determination

Example table:

4. Entitlement calculation¶

Final calculation in targeted_childcare_entitlement.py:

• Checks if child’s age is exactly 2 years using age_eligibility parameter

• Applies entitlement hours (570 annually) for eligible children

• Multiplies by appropriate funding rate based on age (£8.28 per hour for 2-year-olds in 2024)

• Returns final annual entitlement amount

Example table: