First baby incoming - confused about Child/Working Tax Credits!

thatdarnguy

Hi all, my wife and I's first baby is due on the 1st of September and we're very confused as to what our entitlement to financial assistance is, if we're entitled to any at all!

We both work full time (I'm 40 hrs, my wife is 35), my wife's T&Cs are changing in April and she's being somewhat screwed over with her maternity leave, she's going from 16 weeks @ 100% pay, remainder @ SMP to 6 weeks @ 90%, 12 weeks @ 50%, remainder @ SMP.

We're not sure yet how long we can afford for her to be off for yet, but we think she'll take at least 18 weeks maternity leave and we're saving up just now to see if we can afford her to be off for a while on Stat. mat. pay too.

We're planning on her going back to work part time after maternity leave, for 3 days a week. We've calculated that if she works 21 hours a week, we'll have a combined earning of £46500 a year and we'll be £6200 per year in childcare (£40 per day x 3 days x 52 wks), although we're considering asking for help from parents for maybe a day or two per week. My wife's work offers a childcare voucher scheme, but mine doesn't (I may yet convince them though...).

With my income being steady it basically comes down to needing around £1000 per month after tax minimum on my wife's income to make us comfortable (this is taking childcare costs into account).

Anyway, what I'm really looking for is some advice on the cleverest way to approach this, as the more time my wife can take off raising the baby the better, but we need to be able to afford it at the same time! If there's a way that my wife could take more time off and be entitled to credits that would make up some or all of the shortfall from missing out on days of work, that'd be great. But we really have no clue what we're entitled to, or could be entitled to! It's all so confusing!!

Many thanks in advance!

Simstwins

Don't think it looks too hopefulm for you in available benefits, especially with the reductions coming in from April 2011.

In terms of the maternity pay offered, your wife is still ahead, as the statutory maternity pay is 6 weeks at 90% and then 33 weeks at SMP.

I don't think on your revised combined income you will receive any assistance with child care payments. My daughter has recently returned to work following maternity leave, with a combined income substantially lower than your quoted figure, and they don't receive any assistance with child care costs. Perhaps looking into family assistance will be your best way forward.

Good luck

zagfles

No you won't get anything through tax credits next year on those figures. Take the vouchers and try to get some yourself. See http://www.hmrc.gov.uk/calcs/ccin.htm

thatdarnguy

See, I figured the same, and then I saw this:

http://www.hmrc.gov.uk/taxcredits/people-advise-others/entitlement-tables/work-and-child/work-pay-childcare.htm#2

According to that table, if our combined income sits between £45-50k, as our childcare costs per week are £120, we'd be entitled to £1095 tax credits?

I just used this calculator: http://taxcredits.hmrc.gov.uk/Qualify/EntitlementResults.aspx

I used our forthcoming details for this year's tax period (just to test and see if we'd be entitled to anything this year if our baby was born last year with the above income) and this is the result:

Based on the information you have entered, your household may be entitled to the following tax credits award:-

Child Tax Credit £99.00
Childcare element of Working Tax Credit £0.00
Sub total £99.00
Working Tax Credit (less the childcare element of Working Tax Credit) £0.00

Note: The childcare element of Working Tax Credit will always be paid direct to the person who is mainly responsible for caring for the child or children, alongside payments of Child Tax Credit.

Total £99.00

This is based on your household income of £46500.00.

This is the amount your household may be entitled to from 04/03/2011 until 05/04/2011. This result is only an estimate and is based on the information provided assuming you make the claim on 04/03/2011. This means the amount shown may not be your entitlement for the full year.

So I guess it looks a little hopeful? When would you typically apply for tax credits? Before or after your baby is born? I notice that in the above calculator with the hypothetical birth being last year, we'd only be entitled from the date of application?

Thanks again

DaisyFlower

The £1095 I believe is the family element combined with the baby element, however from April 2011 the baby element is being dispensed with and the £545 family element is being cut so those with one child and earning over £40k will cease to get any tax credits.

If your combined income is £46k with her working part time then you shouldnt even need to consider state help. Given shes working full time at present and there are just two adults in the household you should be able to save a significant amount until September if you need the extra money during maternity leave.

lauzellen

In your situation you would be much better to claim the childcare vouchers - you will not get assistance from tax credits on that income from April