in a pickle over finances...please advise

[pinguthepenguin]

Hi folks.

I know that this is another boring question about tax credits etc, but I really dont know what to do for the best on this one.

I work full time and on paper, have an apparently good salary. I have been in receipt of tax credits for a year, because I was mat leave for part of last year, and so my income was quite low.
Since returning to work a year ago, I've found that financially, I've been quite ok and have been able to meet my bills and cover childcare etc no probs. However, they've now reassesed ( as I knew they would, given the tax year end) and was shocked to see my payments will have been reduced very drastically, meaning that it will not even cover a 3rd of my childcare costs.

I do receive maintenence from DD's father, and as I say,on paper I earn a good salary. On this basis, I expect that some of you will wonder what I have to complain about - but I'm worried sick about how I will manage to pay my mortgage/utilities/debt/childcare by myself without this money. I had not expected the cut to be so severe. The tax credits people basically said I had to suck it up due to my income, which is easy to say when there is just one person paying all the sodding bills ( I know its the same for all of us, btw)

In an attempt to find a solution, I've been wondering whether I should withdraw from tax credits and take up childcare vouchers? the information out there confuses me, as it seems you cant have both? I'm hoping someone on here will have wise words to help me adjust to a £360 overnight cut in my monthly income

I am fairly sure you can have both tax credits and childcare vouchers - I know friends who have. That would surely help towards the difference?

Actually I might be talking bollocks but this link might help you:

www.childcarevouchers.co.uk/Parents/HowItWorks/ForYou/Pages/SalarySacrifice.aspx

Thanks gomez....I'm still not really clear though, ahving read it or whether or not it will be worth my while. It seems the vouchers most benefit higher earners, but i dont quite fall into the 'bracket' ifyswim, but neither do I qualify any longer, to recieve up to the maximum help with childcare costs.

If my understanding is correct, you get childcare vouchers regardsless of your income. your employer has to be part of a nursery voucher scheme (which they can set up easily if they don't already have one), and then up to a maximum of £243 pounds can be paid directly to your childcarer each month.
that £243 comes straight out of your salary pre tax and goes to the childcarer, you don't see it, and you do not pay tax on it, so what you save is the tax you would have paid on that additional £243 - exactly how much will depend on your tax bracket.

does that help?

Pingu, I sympathise, I work full time. I too fall into the category of not receiving much working tax credits (my dcs don't need childcare any more)but I don't get any maintenance whatsoever and my salary is such that I struggle to keep my head above water with mortgage/bills etc. I just have to manage.

[Sigh]

Hope you find a way round it. I can't.

Not much help just empathy.

thanks to you all for the replies.

I think although my understanding of childcare vouchers is limited, I'm pretty sure if you take them, you can then expect a further cut in yuor tax credits? that is...in the sense that they are both tax relief schemes and as such, you cant have both forms.

Am I right?

Maybe I just need to seriously think of a way to absorb such a huge cut in my monthly income - I mean, how do I actually do that?

I think you are right essentially. But reading the link suggests that you would disregard the amount of childcare voucher you get - so if the max then £243 - from your child care costs for tax credit purposes if that makes sense. Because as you say you have had tax relief on it. But if your costs are greater than that you may be be claim on the rest.

You wouls till get the family element too.

I think however you would probably be better of remaining on tax credits.

Could your DD's dad claim the nursery vouchers? Would that help at all?

'Tis not easy - sorry I can't be of more help.