Childcare element rates from April 2011?

RuskLady

I am currently on maternity leave and due to return to work in April. I have three children, one at primary school and 2 who would require full time childcare. I have worked out that childcare will cost approximately £1,500 - £1,600 per month. My dilemma is that I have no clue, come April what I will be entitled to with regards to tax credits and the childcare element of tax credits due to the £40,000 income cut off being introduced by the coalition government. I am therefore unable to budget, forecast or estimate my finances from April with childcare costs included.
My husband is self employed and therefore it is difficult to estimate his earnings for the year, I tend to give HMRC a high estimate as I feel it’s better for them to owe us money than the other way around, however this usually makes our joint income approximately £46,000 per annum. If I estimate this amount for 2011/2012 then I am guessing we will be entitled to nothing. I earn approximately £1,640 per month and therefore it would not be worth me going back to work. I cannot however afford not to work as we have a mortgage, bills etc to pay.
Would we be better off ensuring my husband only earns enough to take us up to the £40,000 limit so that we get help with childcare costs? Otherwise, if we don’t receive a bit of help, the new government will force my husband to have to give up work to look after our children (as I am the main earner), although we then wouldn’t be able to cover all of our outgoings on just my earnings and we both of course want to work.
Does anyone have an idea or know where I can find out roughly how much we would be entitled to once the new limits are in place, assuming our joint income is £40,000? I really need to start looking for a childminder now, but I don’t know if I can afford childcare as I won’t be able to get an estimate from HRMC of what I am entitled to, if anything until April, which is too late.
Sorry for the long post but any help or advice greatly appreciated.

nannytone_2

who's looking after your kids? £400 a week for 2 kids is an amazing amount!!

RuskLady

Childminder, approx £4 per hour for 43 hours x 2 children and 13 hours x 1 child.

nannytone_2

you could get it for almost half the price¬

RuskLady

I'd like to know where in the South East I could get much cheaper than that?

whitewing

Have a look on the main site: http://www.moneysavingexpert.com/family/childcare-costs

It does mention the changes. I've only skimmed it so I'm not sure how helpful it will be.

The Debt Free Wannabe forum will help you see how you could manage if your DH has to give up work, if you post a statement of affairs (SOA) see the sticky at the top of the thread. (If you don't have debts they will still help). I'm not particularly even thinking that he will, just that it may reassure you to have a think about it.

nottslass_2

nannytone wrote: »

who's looking after your kids? £400 a week for 2 kids is an amazing amount!!

About average I'd Say

zagfles

You misunderstand the "40,000 threshold". This is the income at which the family element (£545) usually starts getting withdrawn. The rest of tax credits, including the childcare element, starts being withdrawn at £6420. However in your case with high childcare costs it's possible that you'll still get tax credits on income much higher than £40,000 (in this case the family element remains till the rest has gone).

The rates are here: http://www.hmrc.gov.uk/rates/taxcredits.htm

So with 3 kids and childcare costs of £400 a week, you'd get the max childcare which is £210 a week (70% of 300), £10920 a year, plus £12870 for the rest (assuming 30 hours, no disabilities). Making £23790.

This would be reduced by 41% of your income over 6420, so on 46k, (46000-6420)*0.41 = £16228. So you'd get £7562.

katygeorge

nannytone wrote: »

who's looking after your kids? £400 a week for 2 kids is an amazing amount!!

i thought that was really cheep, i work in a nursery and you wouldnt get them in there for that, would be double