Anyone any good with tax credit calculations?

[gallicgirl]

On my last calculation statement WTC entitlement is nil based on income and the childcare element is also nil as reduced due to income.

So the only tax credit we get is child tax credit.

The bulk of my childcare costs are for my toddler and from April he will get the 3 year old funding so costs will drop dramatically I hope.
Given that we don't seem to get any childcare payments, am I right in thinking the funding next year won't actually change the amount of tax credit we receive as it is based purely on income?

Also, if that is the case, why on earth were we asked to show proof of childcare payments for the last year?

The cut-off for the childcare element is higher - do you have a partner? What is your income and their income, and how many hours a week do you each work?

Hi

Yes I have a partner, 2 children. Gross joint salary is £37791. Childcare costs are £6084.
I work 19 hours, DH works 39 hours.

Do either of you pay into pensions?

Gross (before tax) pension contributions are deducted from salary for tax credit purposes.

Yes. I'm assuming HMRC deduct the relevant figures as they have info through RTI. I didn't recall being asked about deductions on the form.

I'm really just interested in working out if any childcare costs are covered so I can work out if tax credits will stop next year when I take up 3 year old funding.

In essence yes they'll stop. Workings and over explanation below:

Based on this years figures and assuming no earnings disregards etc. tax credit for families over the working tax threshold is £545 family element and £2780 per child.

Your family pot before earning related deductions would therefore be :£545+£2780+£2780 = £6105

To calculate the earnings deductions you take gross pay after allowable expenses i.e. pension contributions, subtract the magic earnings threshold number £16105 and for that money thats remaining you lose 41p of your pot tax credit for ever £1.

Gross salary £37791 - magic figure £16105 =£21686 that's the amount that you lose 41p from the pot until it's gone for each pound you earn.

£21686 x 0.41 = £8891 (that's the number of pounds you'd lose from the pot)

As the total pot based on two children is £6105 the amount you'd lose at a rate of 41p in the pound is greater than the pot so you wouldn't be able to claim anything.

For a family with two chidren and no childcare expenses, or disabilities, the cut off for household income after allowable expenses is £30,995.

Thank you.
So basically there is a childcare element within the child tax credit as well as the working tax credit?

IN a way it makes life easier to not have tax credits as I can easily see that we'll be better off with lower childcare costs and the possibility of working extra hours.