Does anyone know about tax credit awards? Does mine look right?

[TheBrilloPad]

Ok, think I have taken out anything identifying.

All this tax credits stuff has made me take a look at my award. DH & I both work. Him full time, self employed, earning £22K pa. Me part time employed (21 hours PW) earning £16K pa.

We have two kids under 3, and pay £1K a month in childcare.

So why does it say we don't get anything for "working tax credits" or the "childcare element" bit?? We only get the "child tax credits" bit. Is that right? Surely, as we work, we should be getting the working tax/childcare elements bit instead, no?

I don't understand how it works though, so if anyone knowledgeable could take a look that would be great!xx

The other two pages of our award below - should be five pics in total.

Not 100% sure on the terminology of each type of credit but check out mse calculator. It doesn't look like you've been awarded enough overall.

Ok, I can have a go at helping you. The way tax credits is worked out is by allocating you a series of 'elements', and then deducting from those elements according to your income. If you run out of deductions, you get to keep what's left. That becomes your tax credit award. If your deductions exceed your 'elements', then your tax credit award is zero.

The first thing that sticks out for me, is that they are saying that they are still using an estimated income for 2015-2016. You should be able to give them an actual income by now - it's a whole year later, so you need to update them.

Your income for tax credits 2015-2016 is £38,278 (page 3). Your allowance before deductions is £6420, which means that £31,858 will be subject to a withdrawal rate of 41%. So, £13,061 will be deducted from any award that is calculated. But it is removed in a certain order.

Your working tax credits award is as follows:

Basic element: £1960.05
Couple element: £2011.15
30 hour element: £810.30
----------
Total: £4781.50
But, you have £13,061 to remove, so £4781.50 is deducted, making it £0.

That reduces your deduction to £8279.50

The childcare costs look low for £250 per week, but you haven't given details...you might want to query it. I think 211 days of £250 week childcare is more like £5k after the 70%, but I might be wrong. But they've taken your £8279.50 and knocked that off the childcare costs, so no child care help for you. That lowers your deduction to £3621.21 now.

So then child tax credits. 2 qualifying children (2 x £2781.30) plus the family element of £547.50 = 6110.10, take away your remaining deduction, and you actually get some money: £2488.89.

The figures don't align precisely, but that's the way it works.

There should be an award for the childcare element of working tax credits as you are claiming for childcare help.
If you did not use childcare then your income would be too high to receive just child tax credits.
I would have expected that somewhere on your award notice it would mention the childcare element of working tax credits seeing as that is the only part you are entitled to !
I would ring and query it.

Babyroobs there is an award for childcare tax credits. It's just been cancelled by the income being too high. However, if they are paying £250 per week, and 70% of childcare costs are eligible, that's £175 per week, which for 211 days of the year would be £5260, not £3692, so I don't understand what they've done there. I can only presume there was a change in childcare part way through the year to more expensive childcare for the first part?

Thank you all - Lougle it sounds like you really know your stuff, my mind is just baffled when I look at the figures, so thank you! Can you explain to me what Babyroobs is saying, that's what I don't understand.

If we weren't claiming for childcare, we wouldn't get any tax credits at all, so why does it not show that we get childcare element?

My understanding is that the new changes limiting to two children don't apply to the childcare element of working tax credits and I thought "oh that's good news for us, that's the only part of TC we get, so we will still get help towards our childcare with DC3", but if we don't actually receive the WTC or the childcare element, then surely we are some of the people who will also get nothing for a third child.

X-posts, thanks Lougle. That makes sense.

Yes, there was a change in childcare costs through the year, we had 1DC in some childcare for a few months of my Maternity Leave before DC2 started childcare halfway through the year, and NOW the cost is £250pw, but it wasn't as much as that for the whole year.

Do tax credits pay for childcare even when a parent is home on mat leave?

Brillo- You should be receiving the childcare element of WTC. I can't see the photos very well, the print is small ( or maybe my eyes not so good !!), so was just basing my post on what I know roughly about tax credit thresholds. Lougle says the childcare element is there on your letters.

Yes, page 4, at the bottom, shows that you do get childcare tax credits. What you'll need to do is check that they have the correct amount for both periods, remembering that you can only claim up to 70% of the costs.

Sadly, I think after all the checking, you'll find that the award is right. Just check that you remembered to deduct the £100 per week for maternity pay from your income.

Ok, so we do receive the childcare element of WTC, it's just all removed due to our income, and the only part left of TC that isn't removed due to our income is the "child tax credits" part. I understand it now.

I'm presuming this is a silly question and definitely a no, but when DC3 is here and also going to childcare 3 days a week, DC1 will be in school so will have hardly any childcare costs, so I assume our award will decrease, as we can only claim for two children. But is it just that you can claim for your first two? We couldn't "choose" to not claim for DC1 (as childcare costs for DC1 will be tiny then) and claim for DC2 & DC3 instead, whose costs will be much higher? I know that sounds ridiculous (and probably entitled/benefit grabbing etc), but just wanted to check!!

Rapidly - That doesn't sound right. Do you both work ore than 16 hours a week?

Impressive

I'm getting more confused as the thread goes on !! Not that we get any tax credits anyway. not sure why it has to be so confusing.

Well the maximum childcare is £300 x 52 = £15,600 per year. But the maximum claimable is 70%, so £10,920.

If your income is £34,000, with a deduction of £6420, your withdrawal is 41% of £27580, which is £11,307.80.

£4781.50 would be taken for working tax credits, reducing your deduction to £6526.30.

If you did pay full claimable childcare costs, you'd get £10,920 for childcare tax credits, but they'd reduce it by your remaining deduction of £6526.30, so you'd be left with £4393.70.

Then you'd have your 3 x 2781.30 plus the family element of £545, not reduced. £8888.90.

£4,393.70 + £8888.90 = £13,282.60.

But of course, you'll have spent out £15,600 in childcare to get that. There are no winners .

Is the family element disappearing from today or is that just for new claimants?

Admittedly I struggle with math anyway but can honestly say I'm in awe of you Lougle. I cannot follow your sums at all even though you seem to have written them quite simplistically so I'm in awe that you can make sense of their complicated system!

I think they make it so complicated so that no-one can check whether their award is right or wrong !!

Oh it honestly isn't that difficult if you know where to look. Each year the Government publishes their tax credit allowances tables. Here is the 2016/2017 one and here is the 2017/2018 one. They give you all the rates for each individual element of tax credits for each year.

So then it's just a case of working out which ones apply to your situation and how many of them you get (so for instance, if you have 3 children you get 3 of the 'child' elements).

The child care is tricky because you have a maximum amount (£175 for 1 child or £300 for 2 or more children) per week, and you can only claim 70% of your costs (so £122.50 or £210 respectively).

After that, you are just deducting £6420 from your income (because the nice people let you earn £6420 before they start deducting anything) and multiplying it by 0.41 (because they deduct 41%of your income from your tax credits) to get the deduction from your total award because of your income.

Then they just look at each element separately (Working tax credits, childcare tax credits, child tax credits), compare the awarded amount with the deduction, and see if you will get any tax credits. If your deduction is higher than the award, you don't, and you deduct the amount of the award from the deduction and move on to the next element. If you do, note it down and move on.

As you go down the elements, even if you don't get anything for the first element, your deduction will reduce, and you may find you eventually do get something by the time you reach childcare tax credits or child tax credits.