Childcare costs help

Tony69

From what I can see the maximum childcare costs you can claim for is for £175 and you can claim a maximum of 70% equalling £122.50.

But I am really confused about the below link, for example if you pay £175 a week then that is only £9100 a year but here it shows examples for yearly childcare costs of £13,535.

I'm sure I'm missing something obvious but I just can't seem to know what it is.

http://www.hmrc.gov.uk/taxcredits/people-advise-others/entitlement-tables/work-and-child/work-pay-childcare.htm#1

zagfles

Yes it seems to be the total without the 30h element (you'd get an extra 790 if you work 30+ hours).

tumboodle

Tony69 wrote: »

From what I can see the maximum childcare costs you can claim for is for £175 and you can claim a maximum of 70% equalling £122.50.

But I am really confused about the below link, for example if you pay £175 a week then that is only £9100 a year but here it shows examples for yearly childcare costs of £13,535.

I'm sure I'm missing something obvious but I just can't seem to know what it is.

http://www.hmrc.gov.uk/taxcredits/people-advise-others/entitlement-tables/work-and-child/work-pay-childcare.htm#1

I've just had a look at that link. I can't believe that a single mum with three children would get £23530 a year based on an annual income of £5100.

What incentive is there to work harder for longer hours (more than 16) if that level of financial support is being dished out?

I hope that I am missing something!!

Icequeen99

tumboodle wrote: »

I've just had a look at that link. I can't believe that a single mum with three children would get £23530 a year based on an annual income of £5100.

What incentive is there to work harder for longer hours (more than 16) if that level of financial support is being dished out?

I hope that I am missing something!!

Yes, but out of that 23,530 she is paying out £15600 in childcare costs.

IQ

midnight_express

What a farce.

tumboodle

Icequeen99 wrote: »

Yes, but out of that 23,530 she is paying out £15600 in childcare costs.

IQ

eh?? to earn £5100???? (16 hours @ NMW) - paying out £15600 in child costs - you're having a laff!!

Even so and if she was earning considerably more, could you please explain what the other £7930 is for??

Seems to me so far that single mum's with children, earning NMW working the weekly minimum hours along with pensioners who have spent their whole life on benefits are creaming the system.

Whatever happened to being a responsible person, taking responsibility for yourself and providing for your own living expenses?

Icequeen99

tumboodle wrote: »

eh?? to earn £5100???? (16 hours @ NMW) - paying out £15600 in child costs - you're having a laff!!

Even so and if she was earning considerably more, could you please explain what the other £7930 is for??

Seems to me so far that single mum's with children, earning NMW working the weekly minimum hours along with pensioners who have spent their whole life on benefits are creaming the system.

Whatever happened to being a responsible person, taking responsibility for yourself and providing for your own living expenses?

I wasn't commenting on the rights/wrongs of it, just explaining what the majority of the payment is which is for costs that go out (although tax credits only cover 70% in reality and claimant has to make up the other 30%).

The remaining amount is child tax credit - payments people get for having children and a low(er) income.

And yes, the tax credit rules have no restrictions so providing you work the minimum number of hours (in this case 16) to qualify for childcare you can claim as many hours as you want up to the maximum (70% of £300). You don't have to be working for all of them. Of course, you still have to contribute 30% of the costs.

tumboodle

Icequeen99 wrote: »

I wasn't commenting on the rights/wrongs of it, just explaining what the majority of the payment is which is for costs that go out (although tax credits only cover 70% in reality and claimant has to make up the other 30%).

The remaining amount is child tax credit - payments people get for having children and a low(er) income.

And yes, the tax credit rules have no restrictions so providing you work the minimum number of hours (in this case 16) to qualify for childcare you can claim as many hours as you want up to the maximum (70% of £300). You don't have to be working for all of them. Of course, you still have to contribute 30% of the costs.

Me sees a scam in the making!!

(1) Receive invoice for childcare - £300

(2) CTC pay £210 - hand over to the child care provider

(3) Child care provider issues a credit note to cover the 'missing' £70.

Mum has the total cost of child care of £210 a week paid in full.

(4) Mum submits the original invoices for £300 to HMRC to confirm CTC payments are correct.

(5) Child care provider submits the original invoices for £300 to HMRC to confirm the amount.

(6) No mention is ever made of the credit note for £70.

(7) Child care provider completes her accounts showing the £300 as paid in full reduced by the credit note of £70 - being a debt owed by mum but written off as mum unable to pay.

NYM

tumboodle wrote: »

Me sees a scam in the making!!

(1) Receive invoice for childcare - £300

(2) CTC pay £210 - hand over to the child care provider

(3) Child care provider issues a credit note to cover the 'missing' £70.

Mum has the total cost of child care of £210 a week paid in full.

(4) Mum submits the original invoices for £300 to HMRC to confirm CTC payments are correct.

(5) Child care provider submits the original invoices for £300 to HMRC to confirm the amount.

(6) No mention is ever made of the credit note for £70.

(7) Child care provider completes her accounts showing the £300 as paid in full reduced by the credit note of £70 - being a debt owed by mum but written off as mum unable to pay.

:think: The Child Minder is running a business...all Invoices/Credit Notes would have to be accounted for....otherwise the Child Minder would be declaring a greater income than s/he actually receives.

Icequeen99

tumboodle wrote: »

Me sees a scam in the making!!

(1) Receive invoice for childcare - £300

(2) CTC pay £210 - hand over to the child care provider

(3) Child care provider issues a credit note to cover the 'missing' £70.

Mum has the total cost of child care of £210 a week paid in full.

(4) Mum submits the original invoices for £300 to HMRC to confirm CTC payments are correct.

(5) Child care provider submits the original invoices for £300 to HMRC to confirm the amount.

(6) No mention is ever made of the credit note for £70.

(7) Child care provider completes her accounts showing the £300 as paid in full reduced by the credit note of £70 - being a debt owed by mum but written off as mum unable to pay.

That wouldn't work on a compliance check by HMRC. Step 4 - they don't ask for invoices, they ask for receipts and bank statements. Similarly from the childcare provider they have the power to ask for receipts and bank statements.

There are lots of ways to 'scam' tax credits, of course you can if you make things up and lie on your claim. But it's benefit fraud.

IQ

tumboodle

NYM wrote: »

:think: The Child Minder is running a business...all Invoices/Credit Notes would have to be accounted for....otherwise the Child Minder would be declaring a greater income than s/he actually receives.

Of course she would. She would disclose an invoice worth £300 as 'sales' which would be reduced down to £210 (the amount actually paid) by way of a credit note for £90 (sorry I put £70 in my earlier post which was an error). She would account for this £210 on which she would pay tax.
The reduction of £90 by way of the credit note is because the payer (the mum) wouldn't pay it and the child care provider quite legally can issue that credit note as it is a bad debt.

The care provider would only have normally charged £210 but they inflated the invoice to £300 to get the maximum out of CTC.