Completely lost with claiming working tax credits for childcare

vibez

Hi,

We are looking to claim childcare working tax credits.

Between me and my partner, we earned £38k between us last year. We rang the tax office and they said we were entitled to £40 per week because they deduct £3900 from the £38k due to maternity pay.

Next year we predict to earn £39,100. In my mind, we shouldn't be entitled to any tax credits, but the tax office said we were because of the £3900 they will deduct due to maternity.

This doesn't make sense to me and i'm worried we will have to pay back the £40 a week they are offering us. Why is there a £3,900 deduction taken into account?

Can anyone please advise....

Caz3121

there is a £100 per week taken off your income for each of the weeks that you were on maternity leave so if 39 weeks maternity leave in the tax year then that would account for the £3,900 deduction leaving you with a figure of £34,100.
There is also a disregard of £5k if your income increases between the previous year and the new year so you can earn £39,100 without there being an overpayment.
Any income over the £39,100 will potentially give you an overpayment

vibez

Thanks, so the £5000 disregard, is that added to the £34,100 or the £38,000 that we actually earned before the maternity deduction?

Chances are that if it is the former, we will go over and end up with an overpayment. Obviously, if we do earn that much money, we won't be entitled to anything the year after that.

What happens if this occurs? Do we have to pay all the money back?

Caz3121

your award letter will show the figure they have used. They disregard will be on top of the current figure so £34,100.
If you earn over £39,100 then you will need to repay any overpayment.
If there is a bonus/increase etc and your income increases more than you expect then you should let them know through the year so they can readjust and avoid any overpayment

vibez

Thanks for the help. If I earn £40k due to company bonuses overtime etc. Do we have to repay all the £40 x 52 weeks credits?

vibez

Thank you for clearing it up