Early learning and childcare - 2 year old eligibility - income threshold change June 2021: EQIA

Changes to eligibility

Through 2 previous amendments to regulations, we introduced an income threshold for those families in receipt of universal credit and aligned the working tax credit threshold. These amendments had the effect that a child is eligible when a parent receives:

• maximum child tax credit and maximum working tax credit, with an annual household income of £7,320 or under.
• universal credit, and take home pay is £610 a month or less.

A combination of UK Government policy changes to the National Living Wage (NLW) , effective from 1 April 2021, means that it is now not possible for a parent aged 23 and over to meet the combined working tax credit and child tax credit criterion. These policy changes are:

• to increase the National Living Wage annually (the legal minimum wage for those age 23 and over, not to be confused with the 'real' living wage);
• to reduce the age that the National Living Wage is payable from those aged 25 and over to those aged 23 and over.

In order to be in receipt of working tax credit, a claimant must work at least 16 hours per week. From 1 April 2021 the annual income for a person aged 23 and over working 16 hours per week is around £7,413.

We are amending the relevant Scottish Statutory Instrument (The Provision of Early Learning and Childcare (Specified Children) (Scotland) Order 2014, as amended) to increase the income threshold for those families who are in receipt of both child tax credits and working tax credits to £7500 per annum; and for those in receipt of universal credit to £625 per month.