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Key Area Briefing - Taxation and Benefits
Working Families / Childcare Tax Credit
Since October 1999, the Childcare Tax Credit has been introduced as part of the new Working Families Tax Credit arrangements. The Government estimates that it benefits approximately 400,000 more families than the old Family Credit system. Families can benefit from the maximum childcare tax credit if household earnings are less than:
- £14,000 per year ( with one child)
- £17,000 per year ( two or more children)
depending on the ages of the children and hours worked.
Families earning up to £22,000 with one child and £30,000 with two children may still be eligible for help towards childcare costs if they are:
- lone parents working 16 or more hours per week
- couples where both parents are working 16 or more hours per week
- couples where one partner works 16 or more hours per week and the other partner is incapacitated and in receipt of a qualifying incapacity benefit
More information for Employers:
Contact the Inland Revenue Employers Help-Line - Tel: 0345 143143
Since April 2000 the Inland Revenue has been responsible for administering the Childcare, Working Family and Disabled Person's Tax Credit. Most parents who qualify will be paid directly by their employers through PAYE.
Employers may also wish to purchase DayCare Trust leaflets "Focus on Childcare Tax Credit" (£2.00)
Tel: 0207 739 2866
e-mail: info@daycaretrust.org.uk
More information for parents :
Parents must have at least one child of qualifying age living with them. be resident in the UK, entitled to work here, have savings of less than £8000 and pay for eligible childcare. This includes:
- Childcare for under 8's registered under the Children Act 1989, including registered childminders
- Out-of-school care for under and over 8's which is provided by a school, on school premises or by a Local Authority
Children qualify up to the 1st Tuesday in September following their 15th birthday or the first Tuesday in September after their 16th birthday if they receive Disability Living Allowance or are registered blind.
Claim packs for the Tax Credits are available from the Inland Revenue via:
- Leaflets from the post office
- Inland Revenue Freephones : 0800 597 5976 / 0800 028 6896
- Job Centres, Benefits Offices, Citizens' Advice Bureaux and Tax Enquiry Centres
Subsidised Childcare
When employers offer subsidised childcare either through places in workplace or other nurseries, places on playschemes, childcare vouchers or childcare allowances, it is often classed as a benefit for their employee and therefore may be subject to taxation and National Insurance contributions. The rules are quite complex and advice should be sought from the local tax office or visit the Inland Revenue website at www.inlandrevenue.gov.uk
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