Tax credits stopping in April 2012

Pepzofio

stjman wrote: »

youngest is 2, 3 in October and we pay £856 a month for 3 days child care

Eldest is 5, 6 in June, at school but we pay £16.50 a week for afterschool club

My basic income is £25k but sometimes there is commission, can vary, usually not mor than £2-3k a year. My wife's part time basic is about £1000 net a month so i think that works out at £16k a year. Our incomes haven't changed for a couple of years now

Any advice welcome as to why we don't meet criteria all of a sudden ?

Even ignoring the commission, £25k + £16k is a bit more than £37k!

Without knowing what commission you're getting this year, it's hard to say what you'll get next year, but working on a figure of £2k, I make it about £62 per week.

Household income: £43k (£25k + £2k + £16k)
Minus £6420 threshold: £36,580 surplus income
41% of surplus: £14,997.80 reduction to Tax Credits award

Max Award:

WTC
Basic Element £1920
Couple Element £1950
30hr Element £790 = £4660

Childcare
12mths @ £856 = £10,272
39 sch wks @ £16.50 = £643.50
Total childcare costs = £10,915.50 (or £209.91/wk)
70% of childcare costs = £7,640.85 (or £146.94/wk)

CTC
Family Element £545
Child 1 Element £2690
Child 2 Element £2690 = 5925

WTC + Childcare + CTC = £18,225.85 - £14,997.80 = £3,228.05pa, or approx £62/wk.

stjman

@ICEQUEEN99

Thanks for the info, but why do they think we won't be entitled to anything now as per letter ? Incomes should be around the same as last year, it's hard to tell in my job, should I give them just my basic of £25k ? I also get commission but this varies month to month, usually no more than £2-3k a year.....if this commission takes away my entitlement to £400 a month in tax credits a may as well say to employers forget my commission ?

Is there a cut off threshold when you pay for childcare ? would we be entitled to any tax credits at all if our joint income was say just over £42k but we paid around £210 a week in childcare ?

Thanks again

Pepzofio

mattalex2008 wrote: »

How is this calculated?
My hubby earns max £30,000 a year (including overtime, basic £24,000). I worked part time at woolies till it closed max £2,000 a year (on mat leave with second at the time) and the only tax credits we were entitled to then, were the basic child tax credit of £40 a month. No child care cost, just child benefit.
It didn't pay me to go back to work as child care and petrol, took more than i could earn!
That is all we still could get, as we did check it out before we deceided i'd stay at home, still only of been entitled to the basic child care, which i still get by being at home with my boys.
I really don't understand how they work it all out!
xx

Couples need to be working a minimum of 16 hours per week each to qualify for any help with childcare costs (unless one partner is incapacitated or in prison), so you definitely would not have qualified when you were out of work, and I'm guessing from your salary that you did not work 16hrs, so you wouldn't have qualified then either. You're treated as being on your normal pre-ML hours for (I think) the first 9mths of ML, although this may have changed to 12mths.

stjman

Pepzofio wrote: »

Even ignoring the commission, £25k + £16k is a bit more than £37k!

Without knowing what commission you're getting this year, it's hard to say what you'll get next year, but working on a figure of £2k, I make it about £62 per week.

Household income: £43k (£25k + £2k + £16k)
Minus £6420 threshold: £36,580 surplus income
41% of surplus: £14,997.80 reduction to Tax Credits award

Max Award:

WTC
Basic Element £1920
Couple Element £1950
30hr Element £790 = £4660

Childcare
12mths @ £856 = £10,272
39 sch wks @ £16.50 = £643.50
Total childcare costs = £10,915.50 (or £209.91/wk)
70% of childcare costs = £7,640.85 (or £146.94/wk)

CTC
Family Element £545
Child 1 Element £2690
Child 2 Element £2690 = 5925

WTC + Childcare + CTC = £18,225.85 - £14,997.80 = £3,228.05pa, or approx £62/wk.

Cheers, found out my wife's basic is actually just under £15k....thanks for your calculation, still don't know why HMRC are saying we won't get anything come April 2012 ???

Pepzofio

stjman wrote: »

@ICEQUEEN99

Thanks for the info, but why do they think we won't be entitled to anything now as per letter ? Incomes should be around the same as last year, it's hard to tell in my job, should I give them just my basic of £25k ? I also get commission but this varies month to month, usually no more than £2-3k a year.....if this commission takes away my entitlement to £400 a month in tax credits a may as well say to employers forget my commission ?

Is there a cut off threshold when you pay for childcare ? would we be entitled to any tax credits at all if our joint income was say just over £42k but we paid around £210 a week in childcare ?

Thanks again

You could earn up to about £50,870pa before your Tax Credits stopped completely, based on the figures in my previous reply.

You might want to check your wife's actual salary though, as £1000pcm take home is more like £14k than £16k (which is about £1,100pcm).

Pepzofio

stjman wrote: »

Cheers, found out my wife's basic is actually just under £15k....thanks for your calculation, still don't know why HMRC are saying we won't get anything come April 2012 ???

You should get about an extra £410pa then (based on £15k not £16k for your wife).

Not sure about the letter, but from reading these boards, it seems a lot of people are getting false alarms.

My guess is they're just sending the letters out to everyone with a higher income than the cut-off point for families of that size, without taking other factors such as childcare/disabilities into consideration.

stjman

Pepzofio

Thanks for your time and calculations, I appreciate you are guessing what HMRC are doing but people like ourselves need to know if our income may reduce, in our case by £400 a month ???

I may try calling them again, hopefully I will get someone who can give my the facts

cheers

Spendless

Pepzofio wrote: »

Even ignoring the commission, £25k + £16k is a bit more than £37k!

Without knowing what commission you're getting this year, it's hard to say what you'll get next year, but working on a figure of £2k, I make it about £62 per week.

Household income: £43k (£25k + £2k + £16k)
Minus £6420 threshold: £36,580 surplus income
41% of surplus: £14,997.80 reduction to Tax Credits award

Max Award:

WTC
Basic Element £1920
Couple Element £1950
30hr Element £790 = £4660

Childcare
12mths @ £856 = £10,272
39 sch wks @ £16.50 = £643.50
Total childcare costs = £10,915.50 (or £209.91/wk)
70% of childcare costs = £7,640.85 (or £146.94/wk)

CTC
Family Element £545
Child 1 Element £2690
Child 2 Element £2690 = 5925

WTC + Childcare + CTC = £18,225.85 - £14,997.80 = £3,228.05pa, or approx £62/wk.

Do people get 70% of their childcare costs paid via tax credits on a 43k income? I was under the impression that that would be the maximum % paid for. I can understand that the OP would perhaps get some help with childcare as the costs are high due to a pre-schooler but didn't realise it would be as much as 70%.

Murgatroyd21

stjman wrote: »

Thanks for the replies so far people, why are they scaremongering poeople like ourselves ? I would understand a reduced payment come April due to budget cuts but to all of a sudden wipe out our benefits altogether ???

How did you work out £492 every 4 weeks Murgatroyd ? I wish someone at HMRC could just tell me what will happen after April so we can budget like most people try and do....still very confused as to what will happen

Basic £1920
Couple £1950
2 x Child £5380
Family £545
Childcare £8372
30 hour £790

Elements £18957

After Salary threshold & 41% withdrawal rate = £6419.20pa /13 = £493.79

Murgatroyd21

Spendless wrote: »

Do people get 70% of their childcare costs paid via tax credits on a 43k income? I was under the impression that that would be the maximum % paid for. I can understand that the OP would perhaps get some help with childcare as the costs are high due to a pre-schooler but didn't realise it would be as much as 70%.

They don't necessarily get 70%, but that's how much is taken in to account when adding up all the elements.

Pepzofio shows quite clearly how the elements are added and then the reductions are applied to give a remainder divided equally over the year.