In order to encourage parents into work the government has introduced Tax Credits (Child Tax Credit and Working Tax Credit) to which almost 6 million families are entitled.
You may be entitled to the childcare element of Working Tax Credit if:
- you are a lone parent working at least 16 hours per week, or
- both you and your partner work at least 16 hours per week, or
- one parent works and the other is disabled, and
- you use a registered childminder, pre-school, nursery or out of school club or an approved childcarer.
In order to receive the childcare element of Working Tax Credit you must make a claim, however, it is solely to help cover the cost of childcare.
How much will I receive?
Depending on your income in the previous tax year (April - March) you may be able to claim (maximum entitlement in 2006 to 2007 tax year) up to 80% of your qualifying childcare costs up to a maximum childcare cost of £175 per week for one child and £300 per week for two or more children. This means the childcare element is worth up to an extra:
- £140 a week (£175 x 80% ) for families with one child, or
- £240 a week (£300 x 80%) for families with two or more children.
The award will continue until the end of the tax year (March 31), however, you must tell HM Revenue and Customs (previously the Inland Revenue) of any changes in your circumstances such as an increase in your salary, an increase in the cost of your childcare, a change in your childcare because your son or daughter has started school and only needs after school care, or because he or she has become eligible for Nursery Education Grant.
How will I receive the childcare element of Working Tax Credit?
HM Revenue and Customs will pay the childcare element of Working Tax Credit directly into a parent’s named bank account either weekly or every fourth week. If you do not have a bank or Building Society account you could open a Post Office card account which can be used to receive benefits and tax credits.
How do I explain I only have childcare costs in school holidays?
As Tax Credits are calculated over a year, you could calculate your costs for a year and receive an average over 12 months or you could make an application before the holiday period and then report a ‘change of circumstances’ to HM Revenue and Customs when school re-starts.
How do I apply?
In order to make an application you will need to provide your income details for the last full financial year, your National Insurance number and the expected costs of childcare. For an application form:
- phone the Working Tax Credit/Child Tax Credit Helpline on 0845 300 3900 (textphone 0845 300 3909). Lines are open from 8am - 8pm seven days a week.
- visit your local Job Centre Plus, Social Security Office or Inland Revenue Enquiry Centre. Staff will be able to help you with the application.
If you are already receiving Child Tax Credit you will need to make an additional application for the childcare element of Working Tax Credit.
The Family Information Service at ask can give you an estimate of your Tax Credit entitlement. Phone 08457585072
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