Tax Credits for Childcare

[lewy]

Can someone tell me how this works. A friend of mine says you can get 80p back for every pound you spend on childcare? no doubt there are conditions to this.. anyone know more?

[yama]

It's up to 80p I think. Not sure how it works, it is means tested but only on earnings. It doesn't take into account outgoings. Best thing to do is phone them - I have always found them to be very helpful.

[ThePhantomToiletFlusher]

It depends what your household income is. IF you earn over something like £54000 a year you don't get anything. Everything under that is on a sliding scale. They have a help-line/website www.direct.gov.uk/en/MoneyTaxAndBenefits/TaxCreditsAndChildBenefit/index.htm?cids=Google_PPC&cre=Mon ey

[ThePhantomToiletFlusher]

Oooh, the link was a bit long, don't know how to make it smaller, I am a link virgin.

[nannynick]

Ah yes, you will be wanting HMRC guide WTC5 which provides information about the Childcare Element of Working Tax Credit.

An important bit in WTC5 concerning the 80% thing:
- Quote from WTC5 -
The childcare element can help with 80% of your eligible childcare costs up to a maximum of

• £175 a week, if you pay childcare for one child
  
• £300 a week, if you pay childcare for two or more children.
  - End Quote -
  
  Maximum childcare element available:
  One child £175 x 80% = £140.00
  Two or more children £300 x 80% = £240.00
  
  
  So the major condition there is that the 80% only applies up to a specific amount. If your childcare costs are higher than that amount, then you can't claim 80% for all of your childcare costs, just up to the weekly limit.