Tax credits and childcare costs for CSA calculations

kittkatt82 · 17 October 2014 at 8:02PM

Hi, looking for some advice as the NRP's wife. Before I continue, I just want to make very clear that my husband has always paid child support and I am really not in any way trying to deprive the other parent of anything.

I am due to return to work after a period of unpaid maternity leave. My husband has just changed his job, so we are in a period of financial assessment. I have just made a claim for tax credits to assist us with our childcare costs when I return to work. We are under the March 2003 rules.

We have been informed that our joint tax credits claim will be included in the assessment. We do not qualify for working tax credit, only child tax credit, and we only qualify for this as we have childcare costs of £180 per week.

Please can someone advise me if they have been in this situation, whether, if tax credits are used in the income calculation, whether regulated childcare costs will be accepted as a deduction from income in the same way that pension contributions are? I ask this as it seems unfair that a portion of government contribution toward childcare costs is then passed to the resident parent who claims this for the resident child in her own right? I.e. if we did not have these costs we would not be receiving the extra income.

No-one seems to be able to answer this within the CSA or within Maintenance Options, all we are told is that it's at the Caseworker's discretion (which will be made in a few weeks' time). This makes a lot of difference to us, so would appreciate any help. Many thanks

shoe*diva79 · 18 October 2014 at 1:53PM

Its correct that tax credits are used in the assessment. Fair... no, i dont think it is, however, your husband will be receiving a discount for the children in your household 'depriving' his first set of children a % of maintenance so swings and roundabouts really.

kittkatt82 · 19 October 2014 at 2:30PM

Thanks for your response Shoe Diva. In our situation, the amount taken from tax credits is considerably more than any discount given for subsequent children we have living with us, and therefore the other parent is actually benefitting from the fact that we do have children, that I work, and that I pay childcare costs. I.e if I didn't pay for childcare, we wouldn't be eligible for tax credits so she wouldn't receive a portion of it, and would receive less what she did on my husband's income alone.

I have now done quite a bit of research and do understand that this is the case. I'm not questioning the fairiness of it as I believe as many others do that the whole system is flawed on both sides. Working tax credit and to some degree child tax credit is an enhancement of household income, but tax credits for childcare are a benefit paid to cover a certain cost in the same way that Housing benefit is which is not used as income. If we didn't pay childcare we wouldn't get the help so can the childcare costs not be offset against the income?

Unfortunately, the CSA2 rules were designed prior to the administration of tax credits so no, were not thought through well. Under the new scheme they wouldn't be taken into account. What is the likelihood of requesting to be transferred over to the new scheme? Does anyone know?

I'm asking this, as my returning to work is now doubling the amount we have to pay and by the time I have covered my expenses of going to work, I'm basically working to pay my husband's child maintenance as I'll be left with an extra £2 a week than if I stayed at home! (Sorry if this is an age old story, but we've not been in this situation before :-( )

Thanks again for any help x

shoe*diva79 · 19 October 2014 at 3:18PM

You cant request to move onto the new scheme. And anyway, the new scheme still includes tax credits as house hold income. Infact, with the new scheme being on gross pay, your husband may find he pays more.

I cant honestly see how your husbands CM liability will double with you returning to work.

How many children does your husband have with his ex? And how many children in your household?

As an example, If your husband earned £1k per month take home with 1 child to pay for and 1 child in household he would have a 15% reduction bringing income down to £850 then would pay 15% of that = £127.50.

If your total childcare is £180 per week then tax credits will pay upto £126 of this (70%). £126 x 52 divided by 12 for a monthly figure is £546 a month. 15% reduction brings that down to £464. 15% of that = £69.60

Obviously thats just guesswork as to incomes and how many kids are involved by hopefully you can get a rough idea that his CM liability has not doubled just because your going to work. Your income wouldn't be used whatsoever in any calculation .

shoe*diva79 · 19 October 2014 at 3:22PM

Think of it another way as well, your husbands wages would be £872ish (based on £1k assumption), plus you would have all of your wages, child benefits and £476ish tax credits a month.

justontime · 19 October 2014 at 6:54PM

It is not much help to you at the moment, but shoe*diva79 is mistaken, tax credits are not counted as income on the 2012 (gross income) scheme. Case closure has started but it will take several years for all cases to be moved to the new scheme, so it is not possible to know exactly when your case will move. You will be notified 6 months before the closure date.

Tax credits and childcare costs for CSA calculations

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