TC/WTC help for new tax year

twinnymum

Have no clue how to work out my next years entitlements! I am hoping to increase my hours in work which will increase my earnings from £10800 to around £26000 for 30 hours worked per week. I have 2 children who I pay childcare for of £140 per week and I am a single parent.

Any help would be great thanks.

bargain_hunter_1964

Hi,

Assuming that you are under the age of 50 yrs without any disabilities and that your children also do not have any disabiilities and that the child care is for both children rather than one then the calculation based on this years (2010/11)
figures, as 2011/12 are not available on a calculator site yet then the amount due would be £98.94 per week child tax credit and £53.61 per week child care allowance working tax credit would not be payable. (this also assumes that neither of your children are below the age of 1 yrs)
I have calculated this from "quickcalc" website that i am able to access but this can be checked if required by ringing inland revenue or you can also check free calculators, this is also based on an annual income of £26k, but if you changed your employment midway through the tax year then these figures would be incorrect as it is based on each years taxable income. Again this can be checked with free advice sites and agencies, ie CAB or maybe "sure start" etc....

So this is just a guide and not a definitive figure due to not having the full facts and the next tax years figures...but hope it helps!

allen35

Tax credits work on a 2 year cycle so previous years income of (£10800) would be used as an assessment for the next tax year, i work it out to £266 approx WTC/CTC weekly at today's rates but this doesn't take into account the new thresholds and increases for 2011/12 tax year.

bargain_hunter_1964

In addition to the above information regarding tax credits calculation if increasing your hours, you also must realise that any change in income will also affect any entitlement to any housing and council tax benefit that you may be in receipt of on your current income, so this needs to be checked too.

Again hope this helps.

bargain_hunter_1964

Hi again,

I have just found the new calculator for next year and based on details given and stated on my last post the figures came out at £108.75 CTC & £33.23 child care .... Allen 35 it is correct that the calculation of tax credits is normally calculated on your P60 end of last tax year but if you are increasing your hours then it is something you are required to advise Inland revenue of and if not recalculated on new income then you risk an overpayment of tax credits for that year.

GobbledyGook

You can only work it out on current rates as the new rates won't be revealed until the Budget is announced.

allen35

allen35 wrote: »

Tax credits work on a 2 year cycle so previous years income of (£10800) would be used as an assessment for the next tax year, i work it out to £266 approx WTC/CTC weekly at today's rates but this doesn't take into account the new thresholds and increases for 2011/12 tax year.

The childcare costs are reducing from 80 to 70% and the increase in income that is disregarded is decreasing from £25000 to £10000 pa.

You would gain in other ways such as increase to the child element and the 30 hour element.

I calculated on your income being £10800 for the whole tax year, if you do decide to increase hours before the cut off date of earl april do notify HMRC immediately to qualify for the 30hr element.

As already stated You would need to calculate how much Housing & Council Tax Benefit you would lose due to increased income and then consider what's best for you.

moneysavermum_2

allen35 wrote: »

The childcare costs are reducing from 80 to 70% and the increase in income that is disregarded is decreasing from £25000 to £10000 pa.

You would gain in other ways such as increase to the child element and the 30 hour element.

I calculated on your income being £10800 for the whole tax year, if you do decide to increase hours before the cut off date of earl april do notify HMRC immediately to qualify for the 30hr element.

As already stated You would need to calculate how much Housing & Council Tax Benefit you would lose due to increased income and then consider what's best for you.

I too am a single parent and earn £18100 for 30 hours and pay £140 childcare. I was told to cap my earnings at below £18300 otherwise my childcare would be affected. It is correct that we will only get 70% of childcare paid from april

allen35

http://www.hmrc.gov.uk/taxcreditsbudget2010/index.htm#3

The amount of help you can get for childcare costs

The amount of help you can get with your childcare costs drops from 80 per cent to 70 per cent from 6 April 2011. The most you can claim for each week is £175 for one child and £300 for two or more children.
This means that the maximum help you can get through tax credits for your childcare will be:

• £122.50 a week for one child
• £210 a week for two or more children

This change may reduce your tax credits payments.

And here are the new rates which show excess above the first income threshold will be deducted from 39% to 41% of the excess, clink on the link it gives some examples

http://www.hmrc.gov.uk/rates/taxcredits.htm

bargain_hunter_1964

The new rates for 2011/12 are available on the quickcalc website, but this is a site requiring a subscription for agencies that use it e.g welfare rights advisors and the figures quoted for £26k per annum and £140 per week childcare cost for single parent and 2 children are as i stated in my last post.

bargain_hunter_1964

Hi Nje24,

I have just undertaken a calculation for you on the quickcalc that i stated and it calculates £108.75 child tax credit and £95.52 child care costs. this is on the new rates for 2011/12 and based on you earning £18100 per annum, having 2 children and child care costs of £140 and working 30 hrs per week...this also assumes that neither you or your children have any disabilities or that either child is less than 1 yr old.