Working Tax Credit, Childcare vouchers and low wage?

clearingout

Hello,
Am after a bit of wisdom, please!

I am hoping (please cross your fingers for me) to get on the GTP come September as a way into teaching. I am a single parent to three small children, one of which will need full-time childcare. The other two will need before and afterschool care, 5 days a week, approx 39 weeks per year.

I will receive a low salary - about £15k. Obviously, I will be entitled to a lot of support through Tax Credits/Working Tax Credits but am trying to work out whether or not I'm going to be able to survive. My childcare costs, at a best guess for now, will be around £1k a working month and WTC will pay most of this (70% now, rather than the 80% it was until recently). Obviously, the childcare costs will drop during holidays as I won't have to pay the school for wrap around care but I will still need to pay a nursery or childminder to keep the space open. Again, a best guess, but I think my ACTUAL monthly childcare, if evened out over 12 months, will therefore work out at about £850 a month (in case that makes a difference to any responses!).

Obviously, I will be working for a local authority, so can only assume that they will offer a childcare voucher salary sacrifice scheme. Can I make up my 30% of childcare costs using such a scheme? If so, is there anything I need to be aware of?

I have had a rotten few years and am poised to get everything back on track but obviously, need to be able to run a car, feed and clothe three children and pay for their childcare (I have an ex who makes no contribution which makes this all the harder). I am just wondering if I would be better going down the PGCE route but am concerned about the impact of having to take a student loan to get by and the 'forced' repayments once I start working. All about balance! Nightmare!

zagfles

See http://www.hmrc.gov.uk/calcs/ccin.htm

You'll probably be better off with tax credits than vouchers

clearingout

thanks. I get that I am better off claiming Working Tax Credit over vouchers but I think what I'm asking is this: is there anything to stop me claiming childcare vouchers to cover the portion of childcare that I have to pay myself?

FBaby

I believe it has to be one or the other, not both, but others might prove me wrong.

clearingout

thanks fbaby - that's what I was looking for. I guess I thought it would be too much of a tax break to get both but was hopeful that I might get away with it since every little helps....will be interested in other responses.

zagfles

clearingout wrote: »

thanks. I get that I am better off claiming Working Tax Credit over vouchers but I think what I'm asking is this: is there anything to stop me claiming childcare vouchers to cover the portion of childcare that I have to pay myself?

No you can't use it to pay the 30%. What you can do I think is use both vouchers and tax credits if your childcare is over the limit paid by tax credits ie £300pw for 2 kids, but yours isn't by the looks of it. What you get in vouchers is deducted from your childcare costs before the 70% is applied.

clearingout

thanks zagfles, that really helps - and it now makes sense!

clearingout

Oh...limits...3 children. Is there a link to the limits, please? thanks!

zagfles

clearingout wrote: »

Oh...limits...3 children. Is there a link to the limits, please? thanks!

It's £300pw for 2+ children

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

clearingout

OK. Have run it through the calculator. It's very generous. It says:
child tax credit; £8085.60
childcare element of working tax credit; £7017.45

and then this bit which I don't understand
working tax credit (less the childcare element of working tax credit): £919.40

total £16,022.45

What is the £919.40 bit?

zagfles

clearingout wrote: »

OK. Have run it through the calculator. It's very generous. It says:
child tax credit; £8085.60
childcare element of working tax credit; £7017.45

and then this bit which I don't understand
working tax credit (less the childcare element of working tax credit): £919.40

total £16,022.45

What is the £919.40 bit?

That's the WTC.

Childcare is part of the WTC, so that bit is the WTC but not including the childcare part which is listed separately