Tax Credits/Childcare: Can someone help me get my head around it?

hattifattener

Thanks for your help,

I know this is a question I should probably be able to google or to work out by myself but been doing this for ages now and my brain is fried.:o

Ok, so I've just done the Childcare Indicator Calculator and it comes back that I'm roughly £700 and odd better off by taking vouchers instead of tax credits, ok, so far so good.

I just did rough numbers as I'm on mat leave and actual circumstances and salaries have been changing, so just did it rough for argument's sake.

It then comes out with our disposable income will go from £25054 to £18000 because of salary sacrifice with the vouchers. Childcare costs will go from Roughly £10000 odd a year to £4500 a year.

So the 25000 figure is roughly our gross salaries minus the 10000 figure, so I'm guessing it means after childcare costs, so I'm guessing the 18000 figure is our salary after deductions and after the 4500 a year.

Ok, so call me stupid but surely this means that although we'll be better off on vouchers than tax credits, we'll also be better off with NO help and paying the entire fee ourselves, by about £7000 a year. Am I right or have I got the wrong end of the stick entirely?

Thanks for any help.

JimmyTheWig

The £25054 is disposable income. I would say, then, that this is after tax and NI.
You'd then have to take the childcare cost from this.

hattifattener

Ok, makes sense, thankyou. But even then the higher disposable income minus the higher childcare cost = more left over than the lower disposable income minus the lower childcare cost, so still better to not claim either tax credits or vouchers?

hattifattener

Sorry, I'm being stupid; just went back and redid the whole form and it's come back with figures that make MUCH more sense.

Coffee break time.:rotfl: