childcare from tax credits - is this right??

lkmc01

Hi

My partner earns 20 grand a year and I have just finished my Msc. We have a 5 year old son. If I was working full time earning £13000 and paying £100 a week for childcare the entitled to calculator shows that we would only get the basic child tax credits allowance of £540 ish and no help towards childcare costs. Is this right?

As if I earned £13000 a year then after deductions it would be £9750. After childcare it would be £4550. If I had to pay £50 a week to get to work then this would leave me with £1950 a year left adding on the child tax credits this would be around £2500. We currently get £2600 from tax credits based on my partners wages and without me working.

Does this sound right? As I thought we could earn up to around 30 grand each and get childcare help.

eskimo26

nannytone wrote: »

so you think you shoul
d earn 60k as a couple and still get help?
before you complain, spare a thought for couples on 20k joint income who get nothing!
you chose to have your child, so live with the consequences!

She said she 'thought' they could earn up to around 30 grand each and get childcare help NOT she thinks she 'should' be able to earn 60k and get help.

She hasn't even given an opinion either way she's just checking if she has been given bad advice.

Get it right before you jump down the poor woman's throat, even you must admit it looks crazy that they are getting more from child tax credits then her whole wage.

You also seem to think she is complaining, what is there to complain about when she could just sit at home and care for the child and be getting £100 more then if she worked full time. Bloody crazy system if that's how it works.:eek:

nannytone_2

doesnt 30k each total 60k?

nannytone_2

It just proves that tax credits are way too generous when someone is better of claiming than working in a 20k+ job

Kimitatsu

CAn I remind you please be nice to all moneysavers

OP as the rules stand at the moment the limit went down from April 2011 from a combined household income of £50k to a combined household income of £40k. It is only those earnign under £40k that will be eligible for help with child tax credits and childcare costs, so the figures are probably correct.

Details here:
http://www.hmrc.gov.uk/taxcreditsbudget2010/index.htm

However if you went out to work or if your partner already works have you looked into the child care voucher scheme to help pay for childcare costs? Currently based on your estimates you are paying over £100 a week in child care so if you used the voucher scheme you would already make at least a 20% saving as you pay them out before tax,

flea72

tbh, when you have one child and earn over £25K then you get very little in the form of tax credits, even when childcare is factored into the equation. I think the £30k each thing you refer to is for Child Benefit, not tax credits

however, i cant understand why you would have go through all that study, to only earn £13k a year, but thats a Q for a whole other board

F

lkmc01

All this is based on a lot of 'ifs' as at the moment I can not get even a voluntary job

lkmc01

I am now very confused over this.

Martin Lewis says that as a couple both working full time hours with a combined income of under £42,000 we could get help towards our childcare cost http://www.moneysavingexpert.com/family/childcare-costs

But when I have used http://www.turn2us.org.uk/benefits_search.aspx and http://taxcredits.hmrc.gov.uk/Qualify/DIQHousehold.aspx

and put in my partners full time income as 20 grand and our childcare costs as £80 or £100 a week with my full time possible earnings as between 15 grand and 25 grand (so 15 grand from myself and 20 grand from my partner totalling 35 grand) it says we can only get the basic child tax credits of £500 ish with no help towards childcare costs.

Can someone please explain? :beer:

I would like to point out that I am not expressing any opinions, only trying to work out the facts.

System

The way tax credits works is that depending on your circumstances you are entitled to various elements of tax credits.

If you went back to work you and your husband would be entitled to the following elements. Assuming no disability.

WTC - basic
WTC - 2nd adult
WTC - 30 hour
CTC - childcare
CTC - child
CTC - family

All the amounts associated with those elements are added together to give a total entitlement and then your household income is used to taper it down. It starts tapering off the WTC first until, if your income is high, it gets to the CTC family and if your income is too high you lose that to.
The government have reduced the maximum income from nearly £60K to about £42K and that's why your entitlement would be so low.

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

HTH

lkmc01

Pam17 wrote: »

The government have reduced the maximum income from nearly £60K to about £42K and that's why your entitlement would be so low.
HTH

Thanks, but why do the calculators I have previous mentioned show that we would not get any help towards childcare costs if our household income was £35,000 a year (15 grand for myself and 20 grand for my partner) :beer:

Sixer

lkmc01 wrote: »

Thanks, but why do the calculators I have previous mentioned show that we would not get any help towards childcare costs if our household income was £35,000 a year (15 grand for myself and 20 grand for my partner) :beer:

Probably because you only have one child.

As noted above, tax credits work like this:

Add up all your entitlements. Use total.

Add up your household income > take away an allowable amount from your household income > multiply the remainder by the withdrawal rate. Use total.

If the total of your entitlements comes to less than the total after your income calculation, you won't get help with childcare. You may get the minimum family element as that has a different withdrawal.

You can add it all up without using one of the calculators from the rates at http://www.hmrc.gov.uk/rates/taxcredits.htm.

If you had, say, three children, then your entitlement would be greater, so you'd be able to earn the same money but get help.