Tax credits after maternity leave (& childcare vouchers)

whiterhouse

First time posting so please bear with me. Basically had third child in July 09 (other 2 aged 5 &3 ) and have just returned back to work (37hr week) my husband works 42week. Have just done my renewal and tax credits now want to give me roughly £400/month I really worried as this seems too high for me. Please help don't want a massive overpayment next year.

Salary details are:

my last years income (09/10) 14433 (due to be on maternity payfor 38wks)
hubbys last year income 25788 (1wk paternity pay)
ALSO NOW
childcare costs as of 9/6/10 £150/wk
estimated income for this yr (10-11) me £30011; hubby 27500

I am now worried about the jump in my salary this year will affect next year (I don't really understand the 25K thing either!)

Also both my employer and my husbands will offer us childcare vouchers with a salary sacrifice. (£243 month each) looking at hmrc website we will actually be worse off accepting these I think!! please help completely confused.

mcnolegs

Ok to try and (over)simplify the £25000 disregard - tax credits looks at 2 years incomes when assessing your claim, the year we are in and the year previous. It will tend to use the lower income for these 2 years when assessing your claim and for most people (as in your case) this will tend to be previous year. So although your income this year is £57000 approx, looking back to last year it was £40000 approx. As the increase is within £25000 of last years income, the lower figure is the one that will be used and this will be correct. The main thing is to ensure that your estimates for this year are correct and in place as it will be next year that you see the increase in earnings take effect. What this means as far as childcare is you get extra help this tax year so you are probably as well taking help from tax credits. Next year your entitlement will be much lower based on your income of approx £57000 and having childcare on your claim will make no difference to any entitlement so maybe look at taking up the vouchers from April

karenx

Also there is talk about reducing the upper income level for child tax credits, so next year you could find you get nothing at all as your above the income level