Childcare & Going back to work....help pls

RACHIE77

I'm currently on maternity leave and am looking at what will happen when I go back to work. I have two children and have been on maternity leave for most of last year and all of this year so far.

My son was born in January 2004 and I returned to work and then left again to have my daughter in December 2005. I am planning to go back to work in May and am trying to arrange childcare.

We are struggling at the moment as it is, my partner is self employed and earns about 16k a year and I was hoping to go back 3 days a week which means annually i'd earn about 11k. I had assumed that due to the fact we don't have a lot left out of our salary after mortgage and bills that we would get some help with childcare... it seems not. Childcare is going to cost circa £350 a month and mortgage is £670 per month for a 3 bed-semi so after bills etc we wont have a lot left...

Mainly i think i'm just confused as to where this extra outgoing is going to come from and actually how much better off i'm actually going to be by going back to work (and losing spending time with my babies) - there seem to be so many factors involved in making these sorts of calculations and I'm not really sure whether I'm including them all and working things out correctly etc...

I'm getting bamboozled and dont know where to start, we aren't living above our means or anything so why does it all seem so scary...

Can anyone advise what steps to take to sort out what I should do and how others in similar situations have worked out if its worth going back to work or basically what should I do!!

I've been looking for answers online at the inland revenue website and entitledto.co.uk but as I dont really know the specific questions I'm not really finding any answers.... Just wondered if someone could guide me as to what to do next and how to work stuff out??

Rachel

sexy_fufu

Hi when your daughter gets to 3-4 she will get her nursery fees paid for Part time.

Also i would check about your earnings my friends were on £30,000 and they were entilted to about £50 per week, you should be entilted to something, Either contact your Local CAB or ring the tax credits up.

I found the website wasnt very useful, if you ring them up they will actually tell you what your entitled to.

You are entilted to something.

Hope this helps.

Spendless

Hi Rachie-
I've bumped a thread - i work for tax credits with a quote on it which may be of some help.

I know my sister on an income of around £31,000 got told she couldn't get help when the twins went to nursery part-time.

Let us know how you get on cos i'd be interested too.

BTW - you do know that it is your total income taken into account don't you. Things like mortgage payments, bills,debt etc aren't knocked off.

flea72

go to the ctc website, and have a mess around with figures - put in roughly what your income would be, and details of childcare, etc. and see how much you would get

then do the same again, but based on you not working (obviously no childcare costs then) and again see what you would be entitled to

then you have to decide whether going back to work is worth the effort or not

for me, after paying childcare, travelling expenses, carpark, etc. i take home about £100/m - but that £100 really makes a difference

based on your joint income, i would say that you will get the basic CTC of about £40 a month, and no WFTC or childcare help

you basically have to be earning very little to get any childcare help

RACHIE77

Hi everyone, thanks for the advice... I've had a look at that other thread spendless and dont really know what question to be asking at the moment but once I get a bit more sorted I will post on there... I think I'm entitled to claim about £37 a week CTC - the calculator confused me so I can't see myself fiddling around with that.

I know that our outgoing aren't considered in the calculations but sometimes I wonder how we are supposed to afford a normal standard of living....!!

I dont want to hijack my own thread but I know people who blag benefits while their kids are at school and sit on their bums all day drinking coffee and are quite comfortably off!! I assumed that going back to work would mean I would get help cos thats what the government are always saying they are trying to encourage but it seems I assumed wrong...

I get more CTC by not being at work than I do by working (for the NHS as well!) and don't have to pay out for childcare to boot - I dont know what to do but I think I need to start at the beginning and work out our finances and bills etc and find out what we can afford etc....

Its just so confusing... does anyone know of a good place to start to work out ur money in general?? financial advisor? online calculator???

RACHIE77

In answer to one of my own questions I have found this budget planner http://forums.moneysavingexpert.com/showthread.html?t=23969 so am going to take a look at that!

irs101

Hi Rachie

Flea72 is wrong to say that you have to be earning very little to benefit from childcare help - as I've said elsewhere some people can earn up to £42.5K a year and still get some help (although not the full 70% of costs).

I've just put something approximating your situation into www.entitledto.co.uk

I've assumed:
a couple
earning £27K a year
2 children (both over 1 year old)
Childcare costs of £90 per week.

It's only an approximation and you should do better than this because you haven't been earning for the whole year and you have a child under 1 presumably.

The award is showing at £2,724.65 per year in CTC - i.e. you don't get any childcare element. BUT.....

If you didn't incur the childcare costs you would only get £547.50 a year. So, because you have these childcare costs, you will get an additional £2,177.15 a year. So tax credits will pay for just under half of your childcare costs.

This probably seems confusing - you can benefit from the childcare element without actually receiving it!

The caveat is that it you must use an approved childcare provider.

The other thing that might be helpful. If your childcare bill turns out to be more than £90 a week, at your income level you will get back the full 70% of any amount additional to this.

Hope this helps

irs

RACHIE77

Hi irs101, this is really helpful and easy to understand.... i think i need to go back and type things in a bit more detail then.. it put me off cos the calculator can't work out that i've had two children since 2003... I was therefore only putting one child in which could be the mistake I am making....

your scenario isnt too far off the mark, slightly less on the childcare but i may play about with that and see if its worth me doing a couple more hours etc just to see what happens! I dont feew so glum now....

leftieM

Just to add to your confusion...
From April all tax payers paying childcare will be entitled to tax and NI saving on the first £200 a month. So as you would both be working you can each save up to £70 a month.
It is law from April 1st but most employers will have to approached to implement it. The benefit for employers is that they don't pay NI on the amount either. There are a few companies that administer the scheme for a percentage but it's not usually too much. Busy Bees is one such company.
If you decide to go back to work, that's another £100+ you'll have. Just remember that your employer is unlikely to implement the law (or even know about it) unless you tell them.
Another thing - I don't really understand how it may affect your CTC/ WTC, pension etc. As the scheme works by you effectively taking a pay cut and receiving a voucher in return, you'd have to check that your pension was still based on the old salary (any personnel manager worth their salt should have no difficulties).

irs101

LeftieM

As far as I am aware the voucher scheme is not the law - it is up to the employer whether to offer it to staff. Happy to be corrected, but when the scheme was announced (and in fact it already exists except that you can only get NI relief at the moment) it was definitely not compulsory - has something changed since then? Do you think people like the Daycare Trust would allow employers not to implement the scheme if it really was the law?

In fact for Rachie77, the voucher scheme will not benefit her even if her employer offers it, because you cannot take the voucher and claim childcare element of WTC.

Say she got a £50 voucher each week, she would save around £16.50 in tax and NICs. Because that £50 is not taxable, your gross income for tax credits is also reduced by £50 - so she will get £18.50 (£50 x 37%) more in tax credits. BUT......she will claim £50 less childcare element, so will lose £35 from her tax credits. So she gains £16.50 + £18.50 = £35, but loses £35 as well. Net result is that she is no better off.

So in Rachie77's specific case, this is an added complication she doesn't need.

That isn't to say that the voucher scheme isn't worthwhile for some - those who claim childcare element of WTC but are still only entitled to the basic family element will benefit from the relief. Also people with very high childcare costs, over the limits for tax credits (£175pw for 1 child, £300pw for 2+ children) will benefit. And, of course, if your employer offers you a voucher without having to sacrifice any salary (and a few do), then go for it.

But, in summary, if you receive more than £547.50 a year in tax credits you will not benefit from this scheme unless you have very high childcare costs. The Government have completely over-trumpeted the supposed benefits these vouchers give.

irs