Tax Credits cuts - don't know what to do

EmmyRoo

Hi,

I just went onto the HMRC website to use the tax credits calculator to try to find out what my tax credits will be this financial year. From what it said, it looks like my tax credits will be reduced to about a quarter of what we received last financial year. This is a complete disaster for my husband and me, as we were only just getting through the month on what they have been giving us up to now.

We both work, earning about £45,000 p.a. gross between us, which is probably why the tax credits have been cut so much, but although it looks like a decent income on paper, it doesn't stretch nearly far enough in reality. Our childcare costs for 2 boys under 4 amount to over £830 per month (I work 18 hours a week) and our mortgage is £650 a month. Factoring in petrol costs (essential for work), food bills and all the other "first of the month" payments we make, we just cannot survive without the tax credits money.

We discussed the possibility of me applying for a career break from work until our eldest goes to school, in a hope that having no childcare costs would make a big difference, but having done some rough calculations in my head I think it'd still mean we were bringing in over £200 a month too little. We can't ask our parents for help as my in laws already pay something towards the childcare every month and my parents support 2 of my sisters still so their money's stretched far enough.

I am feeling really panicked about this, I just don't know what to do or who to turn to for advice. I searched the web this morning but there doesn't seem to be any advice about the new tax credit cuts and what to do in this situation. I'm sure we aren't the only family in this situation.

Can anyone offer any words of advice? We already live frugally and have no holidays, never buy clothes for ourselves (most of the kids stuff is presents from friends and family), my husband and I never go out for meals or to the pub etc. so I can't see how we can cut back on expenditure anymore. We have done Martin's Budget Planner spreadsheet and use the "piggybanking" technique.

Thanks.

E. x

merlin68

If you can't survive on your income, there's something wrong somewhere. You wouldn't have got much more than £10 a week anyway on that income.

Hammyman

This has to be a troll, right? Your joint income is about £2700 a month and you can't survive on that? You are kidding? Your mortgage is only £150 a month more than mine. Both the wife and I drive around 200 miles per week each in relation to work. Our household monthly income is roughly what you have once you've paid for childcare. I'd hardly class ourselves as being skint.

If you have a lot of debt, that is your problem and not the tax payers. I suggest you contact CCCS as you obviously can't handle it.

zagfles

Yes, unfortunately for you familes like yours are getting big cuts in tax credits, due the childcare % going down and the income withdrawal % going up. You will pay a bit less tax this year which will save you £400 a year (and you should hardly be affected by the NI changes).

You could post a SOA (statement of affairs I think it stand for) on the Debt Free Wannabe forum, they are good at finding ways to save money, have a look for an example.

zagfles

merlin68 wrote: »

If you can't survive on your income, there's something wrong somewhere. You wouldn't have got much more than £10 a week anyway on that income.

Yes they would, with those childcare costs. Probably about £50pw.

Mind you I make it about £28pw this year - so "only" a drop of about £22pw. There might be something else which means the OP was getting paid more this year eg if 09/10 income was a lot lower?

EmmyRoo

No Hammyman I am not a troll. I thought (maybe naively) that people on these forums helped each other out with money problems, I didn't realise that we were judged for them first.

My husband and I drive over 300 miles a week between us which costs a fortune in petrol these days but is unavoidable for our jobs. We do have debt on credit cards of about £6000 which I completely accept is our own problem (although most of it has been spent on things we needed and had no other way of paying for, e.g. the £1400 in essential car repairs we were forced to pay in November last year). I think compared to many people this is a very small amount of debt to have.

My problem lies mainly with the fact that as a mother of young children I am expected to go out to work to help boost the economy, but I the help I need to pay for the necessary childcare is being cut to a quarter of what I need.

I'm glad you don't feel that you are skint on a similar income to ours, but perhaps you don't have as much expenditure as we do?

Thanks for the suggestion zagfles, I'll have a look at doing an SOA.

E.

Jowo_2

The members of the Debt Free Wanabee board will give you advice how to deal with your debts. You don't indicate how much of your income goes on servicing them each month but the DFW board will provide you with help on how you can reduce payments, etc.

annie2011

EmmyRoo wrote: »

No Hammyman I am not a troll. I thought (maybe naively) that people on these forums helped each other out with money problems, I didn't realise that we were judged for them first.

My husband and I drive over 300 miles a week between us which costs a fortune in petrol these days but is unavoidable for our jobs. We do have debt on credit cards of about £6000 which I completely accept is our own problem (although most of it has been spent on things we needed and had no other way of paying for, e.g. the £1400 in essential car repairs we were forced to pay in November last year). I think compared to many people this is a very small amount of debt to have.

My problem lies mainly with the fact that as a mother of young children I am expected to go out to work to help boost the economy, but I the help I need to pay for the necessary childcare is being cut to a quarter of what I need.

I'm glad you don't feel that you are skint on a similar income to ours, but perhaps you don't have as much expenditure as we do?

Thanks for the suggestion zagfles, I'll have a look at doing an SOA.

E.

Hi E,
I am sorry that you didn't seem to get much supportive answers>
Unfortunately, I am of no use to you as I am in a similar position - but on a bit of a lesser salary. From what I can see there seems to be no incentive for us to go back to work - given that if you are married or in a couple it just doesn't seem worth while - on the other hand if you are dishonest enough and pretend to be a single parent or seperated then it looks like you will get 70% ish of your childcare cost covered! I live in Nothern Ireland and it seems to be that if you are living with a partner but not married one should consider themselves single - i am totally against doing anything dishonest but sometimes you just have to wonder!!!!

themull1

Could you give up work to avoid childcare, or would you be worse off?

welshmoneylover

It seems the childcare fees are hurting you the most, wouldn't it be cheaper to hire a nanny/au pair?

bestpud

If you can't survive on an income of £45k plus help from your parents plus child benefit plus tax credits then something is very wrong.

You may think you cannot cut anything but I can't believe that amount of money is spent on essentials only.

Is your oldest just under 4? I guess things will ease when he starts school?

Or is it possible for one or both to go to cheaper childcare? Maybe a playgroup instead of a day nursery for the eldest?

I'm sure there is something you can cut down on. What about your utility bills and or shopping budget? Check out the oldstyle board as they are experts at feeding a family for less.

Personally I think its ridiculous to have a family with your income dependent on tax credits and you need to turn them into an extra rather than part of your household income.