Family tax credit - employers/employees perspective

Randy_Trouserman

Hello,

I employ a colleague who has been with the company for 4 years. She left to have a baby and has returned, for 3 days a week for the past 16 months.

We're finding that we're calling on her to do more and more but it's on an 'as needed' basis rather then giving her a set number of days a week. Some weeks it's just 3 days, other times it's 4 or 5, (she's happy to fill in as we need her). Obviously her tax credit has been reduced as a result.

What hasn't been reduced is the need for nursery cover, it's gone up and therefore she's no better off working for the extra days. It actually leaves her in a worse position. This has been going on for approx 3 months.

1. The powers that be know about her increase in income but not the increase in outgoings. How can that be resolved?

2. Can any of this be backdated?

Any help appreciated.

Thanks

flea72

unfortunately, you cant keep changing the figures for childcare, where childcare is concerned. changes in fees can only be used if its a regular increase

does your employee find it easy to keep adding extra days here and there?

the simplest way to work this, would be for your employee to pay for f/t childcare (which she is then allowed to claim upto 80% of through tax credits), and her contract is amended to show that she is required to work additional hours as and when needed - that way there can be no ambiguity as to why she is claiming help for childcare, on days that she might not be at work. although she will have to obviously pay for f/t childcare, she doesnt have to send her child, should she wish to spend time with them

or another option would be to sign up to nursery vouchers via salary sacrifice, as this is alot easier to keep changing the figures for

F

Randy_Trouserman

Hi Flea 72,

yes she's fine at adding the extra days when needed, great colleague to work with!

I'll ask our financial bods what we should do with regards to full-time childcare and amending her contract.

Do you know if any of this can be backdated?

Thanks.

flea72

Randy_Trouserman wrote: »

Hi Flea 72,

yes she's fine at adding the extra days when needed, great colleague to work with!

I'll ask our financial bods what we should do with regards to full-time childcare and amending her contract.

Do you know if any of this can be backdated?

Thanks.

no it cant be backdated

tbh, for ease i would really suggest implementing the childcare voucher scheme, as shortly your employee's child will be entitled to early years funding, and once that kicks in her childcare bills will drop considerably, meaning her entitlement to help with childcare via tax credits scheme, may mean she gets little/no help via that route

the early years funding is also only available for 38 weeks of the year, and because you can only inform tax credits of prolonged changes in fees, it means on the weeks you dont get funding, you cant get any additional help, whereas with salary sacrifice, you can alter the amount from one month to the next, as its done through your wages

the scheme is very easy to implement, and your payroll dept should have no trouble fitting in with the usual wages run

F