Tax Credits - Childcare element

dangerousuk2

Hi Folks,

Hoping you can help clear something up.
My wife and I currently get about £140 a month through tax credits.
Our current childcare costs are just over £700 a month. We have one 2 year old son who attends a local nursery. My wife and I both work full time with a total wage before tax of £38000.

Now I am aware that anyone earning over 40k after next April (budget time) will no longer be entitled to tax credits. I dont think we will be earning over that if my calculations are correct, but if we did would this also mean we would no longer get help with childcare costs?
Combine that with a mortgage and other commitments and things could get pretty tight.
Thanks for any advice

Rob

Mips

You should be getting more tax credits already I think?

slscarborough

I agree you should be getting more already. In 2008 I was getting approx £600 a month tax credits with a joint income of £37000 and childcare costs of of £700 a month.

dangerousuk2

afraid not already checked that out

dangerousuk2

slscarborough wrote: »

I agree you should be getting more already. In 2008 I was getting approx £600 a month tax credits with a joint income of £37000 and childcare costs of of £700 a month.

Wow, that is a crazy amount! Only just saw your post.

They must have reduced the award since?

themull1

you can claim childcare through work, you will be given so much of your salary tax free i think. you have to apply. Maybe give the tax credit office a ring and ask their advice.

dangerousuk2

I need to look into things more so it seems. Our current award seems rather low?
The most we got was 360 a month, and that was when my wife was on Maternity pay (5000 a year less than we are on now. Tax credits is based on previous years earnings etc so our son was in nursery the following year)

DaisyFlower

For one child, earnings over approx £25k would mean no help from tax credits with childcare costs usually.

dangerousuk2

Not sure about that Daisy, our childcare costs are over £8500 a year, which is quite a large amount.
We are entitled to nothing else so was hoping for at least help with covering a bit of that

Murgatroyd21

dangerousuk2 wrote: »

Not sure about that Daisy, our childcare costs are over £8500 a year, which is quite a large amount.
We are entitled to nothing else so was hoping for at least help with covering a bit of that

The amount of tax credit you get takes in to account your childcare costs, and if you didn't have those costs, your payments would be less. You need to remember the way calculations and reductions are made. All your entitled elements make up the total you are entitled to, all your deductions based on total income are made in an order that reduces the amount you get, applied against wtc first, then childcare, child element then family element. If there was no childcare costs in the equation, it would have been deducted from the child element then family element.

You would be entitled to
Working tax = £4600
Childcare = £6800 (80% of actual cost)
Child tax (including family element) = £2845
Total = £14245

Deductions = £12425

So first reduce wtc to £0 = £9645 still entitled, £7835 deductions to be made
Reduce Childcare to £0 = £2845 still entitled, £1035 deductions still to be made
Reduce child element by £1035 = £1810 to be paid divided by 52 weeks then x4 = £140 each 4 weeks.

These figures aren't exact as I get the actual deduction amount closer to £12316, but used the figures provided as the basis.

As you can see, if you didn't have the childcare costs, there wouldn't be any payments. How you look at the payments you get are for you to decide. You could think of them as childcare payments rather than the child element.

dangerousuk2

Thank you for taking time to post that Murgatroyd21.