childcare from tax credits - is this right??

lkmc01

Right so you're now saying that I should ideally have 2 more kids before trying to get a job!!

clemmatis

lkmc01 wrote: »

Right so you're now saying that I should ideally have 2 more kids before trying to get a job!!

would you be expressing an opinion here, lkmc01? And putting words into Sixer's mouth?

zagfles

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:

It's borderline - but I make it 32900 with 1 child and 100pw childcare (over that you'll just get the family element, below that you'll get a bit more CTC).

But for the first year you will get a lot more since there's a 10k disregard for income increases, eg assuming you had no income in 2010/11 (or an income under £5k), and 15k in 2011/12, they'll assess you on an income of £25k this year, not £35k.

Try turn2us again being very careful about the income year it asks for and the question about whether you will earn over 10k more this year.

lkmc01

So we would only get help towards our childcare costs if I was earning less than 16 grand a year? I'm in a right muddle with my calculations so zagfles could you please show me the calculations behind this? Thanks

zagfles

Kimitatsu wrote: »

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.

That's a common misunderstanding. There is no "limit" in tax credits, it's the threshold at which the family element (usually) starts being withdrawn which has been cut from £50k to £40k. That won't affect the OP at all (as their income is under £40k).

It is perfectly possible to get childcare help on incomes much higher than £40k, with 4 kids and 300pw childcare the limit is about £70k!!

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,

Yes, and generally it's done via salary sacrifice so you save NI as well.

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

zagfles

lkmc01 wrote: »

So we would only get help towards our childcare costs if I was earning less than 16 grand a year? I'm in a right muddle with my calculations so zagfles could you please show me the calculations behind this? Thanks

Sorry I made a mistake in my previous calc - I've editted that post...

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

Add the elements you'd be entitled to assuming 100pw childcare. Don't include the CTC family element yet, as you get that in full as your income is under £40k, so it's not subject to the taper.

WTC basic: 1920
WTC couple: 1950
WTC 30hour: 790
WTC childcare: 100*52*0.7 = 3640 (assuming whole year)
CTC child: 2555

Total = 10855

All the above is subject to a 41% income taper on income over 6420 (first threshold in the rates).

So it will all be gone when income gets to:
6420 + 10855/0.41 = 32895

You will get the family element in full (545) provided income doesn't go above the second threshold in the rates (£40k).

Sixer

lkmc01 wrote: »

Right so you're now saying that I should ideally have 2 more kids before trying to get a job!!

I'm not suggesting anything. I'm simply answering your question. You don't understand how tax credits work and are asking questions. I, and others, are trying to explain the system to you.

The system feels that two children cost more than one, three children cost more than two, etc, etc, and so it reflects that.

It really isn't that complicated.

lkmc01

Well my partner earns 20 grand a year and has done so for about 3 years now. I did not earn anything last year or year before but have earnt 1300 this tax year from a months work as a census collector. The jobs I have been looking at are paid at about 20 grand a year. Had interviews but no job yet. Our childcare could be up to 130 a week as an average if I find work where we have no family support. We currently get 20 grand a year from my partners wages pre tax, 2600 in child tax credits and 1050 from child benefit. And if I don't find work soon I'll go mad

lkmc01

So if our household income is below 40 grand (not 42 grand) paying 100 a week towards childcare we will get 545 a year. If its 30 grand a year we would still only get 545 a year. Above 40000 a year we would get nothing. So the conclusion is there is no point in me working unless I leave my partner and son.

zagfles

lkmc01 wrote: »

So if our household income is below 40 grand (not 42 grand) paying 100 a week towards childcare we will get 545 a year. If its 30 grand a year we would still only get 545 a year. Above 40000 a year we would get nothing. So the conclusion is there is no point in me working unless I leave my partner and son.

No. Read the previous posts again...carefully.

On £30k this year you will be assessed on £20k and with childcare costs you will get a lot in tax credits. Although that will go down next year, but will still be above the basic 545.