Child Tax Credits, totally confused?? What are we entitled to?

dantheman2010

Good evening all,

I was just wondering if someone could please explain a few things in an easy format for me to get my head round.

Firstly, my partner and I are planning on starting a family soon, we have worked out we can afford all of our household bills whilst she is receiving SMP.

But where we get confused is what we are entitled to once we have a child.

I did an online calculator on the HMRC website and it seems to differ somewhat to the calculator for child tax credit and working tax credit that is on here.

Currently we both work full time, I am 27 and she is 23. I earn about £25,000 before tax and she earns about £11,000 before tax (£36,000 for the household). What we are trying to work out is would we be better off if she returned to work full time after having the baby and paying for child care, or whether it be better to stay off work and look after the child herself?

Ideally she would like to return to work but as she gets paid a relatively low wage it may be pointless if forking out £100+ a week on child care.

So what would we be entitled to (monthly) on both child tax credits and work tax credits. I also see we get child benefit of something in region of £20.00 per week.

Bit further detail;

Combined (after tax) we bring in £2350.00
Less £300 mortgage
Less £350 loan
Less £110 council tax
Less £150 petrol
Less £50 car insurance
Less 35 mobile phone
Less £10 breakdown
Less £60 household bills
Less £200 food
Less £10 household insurance
Less £60 sky
Less £12 TV Licence
Less £30 mobile phone second
Less £20 home phone

Equals £953 left

Less say £500 per month on day care

Equals £453 per month (plus about £3500 in savings)

I really hope someone can make sense of the above and give me some information on child benefit, tax credit and working tax credit.

We are trying to do the sensible thing to make sure we have enough money and will be financially secure when trying.

Thank you

karenx

You wont get working tax credits on your joint income, cut off is 18k approx. You may be entitled to a small amount of the childcare element to help with childcare costs.
You will also get £20 child benefit per week
Benefits dont take into account debts and bills you have to pay.

zagfles

You're probably better off with vouchers for childcare (most employers do them as it saves them NI). See http://www.hmrc.gov.uk/calcs/ccin.htm

You'll get the family element of CTC next year (£545 a year) but probably not the year after due to the upcoming changes.

dantheman2010

Thank you for all your help. Well her company really arent very helpful or very big, and I work in a small firm for my father, so neither employers offer these vouchers.

dantheman2010

So would we still be no better off if she didnt work and looked after the child full time? As our household income would still be more than £18k because of my salary?

property.advert

You should already have but will definitely need life assurance. Easy another £50 a month there for a few £100ks or more.

The choice about working or childcare is not purely financial. Mothers lose skills and future employability and kids need to learn from other environments, not just mama's knee.

dantheman2010

Sorry yep I do have life insurance, enough to completely clear the mortgage. Yes my partner would prefer to go back to work, undoubtedly.

Here is my confusion;

Child tax credits on MSE say we would be entitled around £40.00 per week and only £10 per week for working tax credits.

Where as HMRC said slightly more, cant remember what it said now.

Yet I just completed the benefits advisor section of direct.gov.uk and did it hyperthetically, everything as it is now but said we had an 11 month old son with weekly child card costs of £155.00 per month (same as what I put for the amount on the MSE calculator) and that said £65 per week child tax credits and £255 per week working tax credits.

I am just totally confused.

Who or where do we go to find out the exact information?

Tigsteroonie

dantheman2010 wrote: »

But where we get confused is what we are entitled to once we have a child.

Ideally she would like to return to work but as she gets paid a relatively low wage it may be pointless if forking out £100+ a week on child care.

Does she/you need to make this decision now? Why doesn't she take her maternity leave, and then think about the situation once she's had the baby?

dantheman2010

No, no decision is required now, but we want to make sure we can manage it financially.

nannytone_2

you wouldnt get any working tax credit and a minimal amount of child tax credit on you salaray alone.

so as long as she earns enough to cover childcare plus £10 a week, you'd be better off with her working.
theres no reason why your employer (your father) couldnt look into the childcare xoucher scheme, as you'd pay childcare costs pre-tax and NI using them.

flea72

entitlement: £545 (family) + £2300 (child) + £1920 (basic) + £1890 (couple) + £790 (30hr) + 80% of childcare = max tax credit

annual income less threshold of £6420 = excess income

max tax credit less 39% of excess income = award amount

play around with figures, to see where you get best return

however even just taking into account your wage, you are on basic rate CTC/WTC. you just have to decide whether paying £500/m out of your OHs wages, would still be worth it for the £300 she could make, as opposed to not working, and bringing nothing extra in

F