Confused over situation with claiming childcare vouchers

singingsister

Hi,

If someone can advise on the situation regarding childcare vouchers that would be great.

Our current situation....

I am working full time (employer does have childcare voucher scheme). Hubby unemployed. JSA finished start of November as he'd been on it 6 months.

Daughter currently in nursery 1 day a week.

I get child tax credits
He gets working tax credits (unsure why as he's not working!)

We went bankrupt on Monday and are now looking at what salary we need hubby to go back to work on.

If hubby does go back to work daughter would need to be at nursery full time.

I know it is not beneficial to claim childcare vouchers whilst she is only there 1 day a week but if he gets full time employment and we both claim childcare vouchers, what benefits would we lose?

We are trying to work out what we'd lose currently to ascertain our position!

Thanks in advance.

Sarah

Icequeen99

Firstly you need to let HMRC know that he is no working and that you are. You will still, as a couple, get the same WTC providing you are working 30 hours or more.

With childcare vouchers it is complicated. You need to work out whether you are better off taking the vouchers and saving tax and NI or claiming help with childcare costs through tax credits. There is no easy answer it is dependent upon on your circumstances.

You cannot claim childcare costs from tax credits for any amount you receive vouchers for. So say your childcare is £100, and you get £50 a week vouchers you can only claim £50 a week from HMRC tax credits. The other option is to claim the whole £100 from HMRC and not get vouchers. (You won't get the full amount, you will get a maximum of 70% maybe less from HMRC).

IQ

singingsister

Hi

I told the tax credits people on Friday last week that he was unemployed and I was working. They still kept the WTC in his name?! Actually worked in our favour as it meant we didn't have to pay his court fees on Monday as he was getting WTC only and not WTC and CTC!

How on earth do you work out if you are better getting tax credits or childcare vouchers?!

I know what I earn a year. I know what we currently get in WTC and CTC and I also know the cost of childcare.

Don't know if it changes things but I think as a bankrupt you get a nil tax code (but I could be wrong).

I'm SO confused!

karenx

Why would you get a nil tax code? So someone can go bankrupt then not have to pay any tax?

Your partners WTC shouldnt be just in his name, it should be a joint claim. Do you have 2 claims going one for him and one for you? As you are saying his is only in his name but also saying you know what you get in WTC and CTC. It is one joint claim for the 2 of you

singingsister

karenx wrote: »

Why would you get a nil tax code? So someone can go bankrupt then not have to pay any tax?

Your partners WTC shouldnt be just in his name, it should be a joint claim. Do you have 2 claims going one for him and one for you? As you are saying his is only in his name but also saying you know what you get in WTC and CTC. It is one joint claim for the 2 of you

I think it depends if an attachment to earnings get put on your PAYE.

I told the tax credits people that I am working and he isn't. On our award notice, it shows WTC being paid into our joint account but in my husbands name and the CTC being paid into our joint account (same bank details) in my name.

Surely when I tell the tax credits people our situation, they should advise who is eligable for what etc?

I say I know what WTC and CTC we get as we have been getting payments for a while now!

I rang up last Friday (and spoke to a very rude person) to advise change of bank details and I went through our personal details to make sure they were correct. The last thing I want is for us to be overcharged and have a "debt".

We get one tax credit award letter and it breaks down WTC payable to my husband and CTC payable to me.

Can you advise what you think we should be claiming for? If what we are getting currently is incorrect then I'll ring up and chase it!!!! :rotfl:

Sarah

molliejo

Hi, this may help.

My son's nursery fees are £500 per month. I get vouchers for £243 a month. The tax credits pay me £179.90 a month. I save £78 a month in tax & NI on my vouchers. It costs me £242.10 a month to put my son in nursery.

If I didn't have the vouchers then tax credits would pay £350 per month and it would only cost me £150 a month.

BUT, and this is the thing, I took my vouchers on salary sacrifice so my tax credits etc went up, I worked it all out and I was slightly better off taking vouchers.

There is a calculator available online www.hmrc.gov.uk/childcare/interaction-tc-cv.htm

JimmyTheWig

singingsister wrote: »

How on earth do you work out if you are better getting tax credits or childcare vouchers?!

You need to know what tax credits will give you to help towards the cost of childcare.
With your OH not working, this will be zero, I believe, and so for now I think you would be better off getting the vouchers.

I'd like to think they'd be able to tell you on the phone what you'd be eligible for in different scenarios.
As a general rule I believe it is usually better to get them paid by tax credits, but if tax credits will only be paying a small percentage and/or only pay up to a maximum which is less than you pay out for then vouchers might be better.