Trying to plan ahead - so confused about tax credits & childcare vouchers!

debtfreesomeday

I'm currently expecting my first child and currently my partner and I both work full time. I earn around 22k & hubby earns 20.5K. After I've had the baby, I will be returning to work part time (18 hours per week) and we will have to pay childcare as we have no family locally who will be able to help us out, so my pay will drop to around 11K a year.

I've spent most of the afternoon trying to work out how much we will be earning / paying out with childcare costs and what we're entitled to, but every calculator I use seems to be telling me something different - even though I'm putting the same values in! I'm so confused and it's really worrying me as to how we'll afford things. We're currently saving like mad and will hopefully have a 'buffer' in savings of 6K to cover the first two years back at work, but I'm trying to work out whether we'll be better off claiming childcare vouchers (we both can through our employer) or claiming tax credits / working tax credits.

The calculators on here seem to contradict the 'entitled to' calculators...

Does anyone know where I can get some more case specific / detailed help from?

Many thanks in advance!

Duncombe

Ok, well, based on the incomes above you won't be entitled to WTC (working tax credit). You may alo fail to qualify for CTC if your income stays above £40k. I believe this is the new figure being used as a cut off point from April next year.

When is your baby due? You may find that child care costs (and the help you are able to receive) changes dramatically between now and when you would need it. Here, I am assuming you will be taking 9 months, maybe a year maternity leave?

But to answer your question, it is difficult for anyone to give definitive answers based on the changes to the welfare system currently being implemented.

debtfreesomeday

Thanks Duncombe. Baby is due at the beginning of February and we can afford for me to take a maximum of 9 months maternity leave before returning to work.

Our joint salary would be a maximum of £32K when I return to work - would they take this lower income into consideration when awarding tax credits or child tax credits or would it be the income from the previous year?

Duncombe

debtfreesomeday wrote: »

Thanks Duncombe. Baby is due at the beginning of February and we can afford for me to take a maximum of 9 months maternity leave before returning to work.

Our joint salary would be a maximum of £32K when I return to work - would they take this lower income into consideration when awarding tax credits or child tax credits or would it be the income from the previous year?

Tax credits are based on the previous years income, but it can all be altered given you will be receiving some maternity pay (I presume?) and will have taken a significant drop in income.

If your baby isnt due until the beginning of next Feb, I wouldn't like to speculate as to what help will be available (in the form of childcare) in December 2011! . Im sure you know of all the impending changes to the benefit system, and there will be alot more cuts announced between now and then no doubt.

I fully understand you wanting to plan ahead, and good on you, but in this climate it is very very difficult to advise.

In the meantime, the only thing I can suggest is to save save save.

alwaysonthego_2

At the moment £100 per week SMP is disregarded per week for the purposes of tax credits, whether this will change I am not sure.

Judith_W

not sure what calculators you are using but I have been encouraged to use this one: http://www.hmrc.gov.uk/calcs/ccin.htm

It looks at the childcare element of working tax credits which is the only element of tax credits which is affected by childcare vouchers. Also, you should be able to start accruing vouchers before you have childcare needs in order to make a greater saving on the tax and NI, just as long as bubs is born

Duncombe

Judith_W wrote: »

not sure what calculators you are using but I have been encouraged to use this one: http://www.hmrc.gov.uk/calcs/ccin.htm

It looks at the childcare element of working tax credits which is the only element of tax credits which is affected by childcare vouchers. Also, you should be able to start accruing vouchers before you have childcare needs in order to make a greater saving on the tax and NI, just as long as bubs is born

But the OP won't be entitled to WTC as their joint income will be £32k.