Tax credits and childcare totally confused

mrsm

Does anyone work in tax credits or have some calculator to give me some sort of idea of how my change in circumstances might affect my TC ?

Currently my husband earns 19200 after pension contribution. I earn nothing. We have 3 children under 5. We get £104 pw tax credits

I'm looking to start PT work, my husbands earnings will remain the same.
There are two possibilities

1) work 10.5 hrs pw. Earn £2587 pa. Childcare would be £1026 for 38 weeks (so approx £20 pw

2) work 21 hrs pw Earn £5174 pa. Childcare would be £2812 for 38 weeks so approx £55 pw

I rang TC and they said option 1 would give me £133.63 pw, option 2 £161.56 pw, both options are more than I currently get and slightly more than I'd be paying in childcare.
That can not be right can it?
I never have any joy with entitledto (even with current figures it comes out with totally different amounts) and the HMRC website gives a slightly lower figure but says its TC only, no WTC or childcare element

Help I'm seriously confused. We've cut back everything we can over the years (thanks to this site so I could be a SAHM) and now an ideal job has come up but I need atleast some idea that we won't be worse off me working and paying out childcare

cw18

I think you'll find those figures include what you currently get

mrsm

I'm not sure I understand what you mean cw18. She said if I started earning on 1/12 then my weekly figures would be the above, both are more than I currently get and slightly more than I currently get + childcare i'd pay

cw18

sorry, I misread one of your figures :rolleyes2

I wouldn't have expected you to be better off in terms of extra TC more than covers childcare, as the most they'll pay for child care is 80% of the costs.

flea72

tbh, both those figures they have quoted you seem wrong (unless you have a child under 1yr?)

we have a joint family income slightly lower than what you would have have in option 1, pay £30 a week for childcare, and get £115 week ctc - we arent entitled to wtc

However on this income, and the smallish amount we pay for childcare, according to the CTC office, we dont qualify for help towards childcare, as we earn too much, and pay out too little. you only get childcare help if you get wtc

hth Flea

[Deleted User]

Please note a very important point - you cannot claim help towards childcare unless both of you are working at least 16 hours p/w.

TC will only help with a maximum of 80% towards your childcare costs so based on £55 p/w childcare costs you will get an extra £44 (approx) on top of what you already claim.

mrsm

Thanks everyone I didn't think it could be right.
She didn't even ask how many hours I'd be working, just my H. I think I'll have to call again and see what I get this time, but how do I know that's right?
Its really frustrating, I know they can't give me an exact figure but I wish they could atleast give you an accurate guesstimate

kei_2

If you've made a lot of changes to the claim already this year i would avoid the SEES estimate the advisers give you like the plague unless its changed in the last couple years.

I would only use it at the start of the financial year. When you're quite a bit through the financial year and if you've made changes already it tends to just spit out extremely skewed figures.

Anyway i think the manual calculation for childcare is done something like this:-

The maximum tax credits award is given to people earning under £6420, as the income goes up it reduces each element by 39%

You can only claim a maximum of 80% of child care costs.

80% of £2812 = £2288

From this we can see what is the maximum you can earn if you want to claim child care costs at £55 per week.

£6420 + (£2288 x 100/39) = £12286

So if you earn over £12286 (unless your 07/08 income was below this) you won't be able to claim child care costs at £55 per week.

This is obviously my manual calculation I've hardly done it since i left the revenue last year so if you wish to take the word of the helpline by all means do so.

I'm inclined to believe that as speaking from experience any families around £20000 in income, the financial gain if any at all from a partner returning to work is pretty minimal.