Does anyone know the income cap for childcare element of tax credits?

[MoNigheanDonn]

I'm sure I've seen it somewhere but can't find it. Need to find out if it's financially viable for me to return to work as childcare costs are slightly more than salary but if we got some help towards the costs then it may be worth it.

£33k (DH)
£9.5 (salary)
£10.5k (nursery)

Thanks

Have you tried inputting different scenarios into the “entitledto” website?

We have 3 children, earn less than you and don’t get any help. But we weren’t asking for anything like £10k so maybe we’d get some paid of that? The calculators have always been pretty accurate for us but if you do an advanced search for the poster @lougle she does the most amazing explanations.

Hi MoNigheanDonn, things have got a bit more complicated since last year, so to work it out, you'll need to look at how many children you have and when they were born, as well as your childcare costs and hours of work, and whether you are already claiming tax credits (and if not, whether you're in a full service universal credit area). If you can give that info, we can look at the calculations and work out if you qualify for any help with childcare costs

If you’re not entitled to benefits you can benefit from the tax-free childcare scheme.
www.moneysavingexpert.com/family/tax-free-childcare

I'm guessing you would like to carry on working if you are considering it despite those high costs and low income. In which case your DP needs to share the career hit- if he drops a day or two of work, (or works 5 in 4 or something) then you may not have a childcare issue.
It's easy to fall into the trap of setting childcare costs against the woman's salary, but of course the childcare is not just for you- you only need it to enable you BOTH to work at the same time.

If you just have one or two children you won't qualify for childcare for tax credits.

We have 3 children, all born before the 2 child cap. I've had a look online and it appears that the cap is 65k. According to the gov website childcare calculator we'd be entitled to up to 7k of help (so the full 70%)

I'm not in work at present but have applied for a couple of jobs. Just needed to see if it would be financially viable. It looks like we'd be very slightly better off, by maybe £100 a month but that'd if the figures are correct.

Thanks for all the responses.

Dh unfortunately can't do anything woth his hours and we'd both be working weekdays.

Childcare for 2 of the 3 as the third (well first!) is too old. Wrap around and holiday care for one and full time nursery for the other on the days of be working.

It's all so complicated. We do currently get child tax credits but the amount we get doesn't seem to match up with what any of the websites say they should be so I'm wary of trusting the sites iykwim.

I can run through a rough calculation, but I can tell you now, that you won't get the full 70%, sorry. Tax credits are made up of elements. For 2017/2018, they are:

Working Tax Credit
Basic element £1,960
Couple and lone parent element £2,010
30 hour element £810
Disabled worker element £3,000
Severe disability element £1,290

Childcare Element of Working Tax Credits:
Maximum eligible cost for 1 child £175
Maximum eligible cost for 2 or more children £300 per week
Percentage of eligible costs covered: 70%

Child Tax Credit Rates
Child Tax Credit family element £545
Child element £2,780
Disabled child element £ 3,175
Severely disabled child element £ 1,290

Tax credits income thresholds and withdrawal rates

Income threshold £6,420
Withdrawal rate (%) 41%
Threshold for those entitled to Child Tax Credit only £16,105
Income rise disregard £2,500
Income fall disregard £2,500

For your circumstances, you would get the following allowances:
Working Tax Credit
Basic element: £1960
Couple and lone parent element: £2010
30 hour element £810
Total=£4780

Childcare Element of Working Tax Credit:
£10500×70%=£7350
Total=£7350

Child Tax Credit:
Child Tax Credit family element £545
Child element £2,780×3=£8340
Total=£8885

Your income: DH £33k, you £9.5k; Total=42.5k
Income increase disregard: £2.5k. Assumed total income for Tax Credits: £40k
Allowance: £6420. £40,000-£6420=£33,580.
Income taper: 41%. £33,580×0.41=£13,767.80
£13,767.80 is how much you will have deducted from your tax credit award as excess income.

So, your award would be:

Working Tax credits £4780 (£13767.80-£4780=£8987.80)
Childcare Tax Credits £7350 (£8987.80-£7350=£1637.80)
Child Tax Credits £8885 £7247.20 (£8885-£1637.80=£7247.20)

So you actually wouldn't get anything towards your childcare in a way that you would see, but it would raise your child tax credit award by £7000, so that your deduction due to income is less of a cut.

In other words, if you take on this work and find a way to do without childcare, you'll get no tax credits at all. If you take on this job and need childcare, you're likely to find that you're going to get the value of 70% of the childcare in child tax credits, but no Childcare Working Tax Credits, because by paying for childcare you just dip your income back into the eligible range.

Wow! Thank you so much @lougle

That's very helpful

I'm glad it helps . I hope it's clear when I say 'you won't get help towards childcare...well you will, but you won't...'. It's that situation where you will almost literally break even by working, in terms of Tax Credits.

You'll actually be £102.80 per year (£1.97 per week) worse off if you work and get childcare. Plus commute costs, etc.

But, you have to weigh that against job satisfaction, pension contributions, etc.