Childcare Tax Credit
Help is now available for working parents who pay for registered childcare. It is called the childcare tax credit and is part of the Working Families Tax Credit. It is run by the Inland Revenue and replaced Family Credit.
You could be eligible if you:
- Have at least one child in registered childcare
- Are working 16 hours a week or more (both partners if you are a couple)
- Have gross family earning of less than £58,000 or less than £66,000 (with a child under one)
How is it paid?
The Childcare Tax Credit is part of the Working Families Tax Credit and is paid to parents in money or offset against tax depending upon the tax status of the family. It is paid to eligible families through the wage packet by employers as part of the Working Families Tax Credit.
Childcare Tax Credit payments are based on parents' annual childminding costs divided by the number of weeks in the year. This means holiday periods - when childminders may be looking after their charges for more or less time than usual - will be taken into account in the calculations, but the amount a parent receives will not vary between term time and holiday time.
The payments are currently made by employers who make them available to eligible employees through their wage packets. Obviously, being self-employed, childminders cannot receive payments through their wage packets in this way. Instead the parents of the children they look after will have to sign a special form to enable childminders to claim the benefit from the Inland Revenue.
How much can I get?
Parents can claim a maximum of 70% of their childcare costs up to a maximum of £175 per week for one child or £300 per week for two children.
Families which earn amounts below around £13,000 (for one child) or around £17,000 (for two or more children in childcare) could receive the maximum amount of Childcare Tax Credit.
What will I receive?
The amount which parents will actually get from Working Families Tax Credit and Childcare Tax Credit will depend upon family circumstances and how many children are in childcare services.
There will be a sliding scale that will affect how much you can claim, with families on lower earnings receiving more than families on higher earnings.
Families earning more will get smaller contributions until the contribution is phased out.
How can I claim?
Call the Inland Revenue tax credit helpline: 0845 609 5000
Where can I get more information?
For more information on how much Working Families Tax Credit you might be able to apply for or on how Working Families Tax Credit will work with other help like Housing Benefit, please speak to your benefits agency, independent advice agency or Citizen's Advice Bureau.
Following discussions between Gill Haynes, NCMA's Chief Executive, and officials from the Treasury and the Inland Revenue, a helpline has been set up to address any concerns that registered childminders may have about the new scheme. NCMA members who experience any problems with WFTC should call 01772 237799.
Other sources of information
- Ask your Benefits Agency office, New Deal Advisor or your Job Centre
- Visit the Inland Revenue website www.inlandrevenue.gov.uk
Can Childminders Claim?
Registered childminders are not eligible to claim the Childcare Tax Credit for their own children if they are doing the caring. The Inland Revenue believes this would go against their principle that parents should not be subsidised for caring for their own children. NCMA is not convinced, and intends to lobby the Inland Revenue and the Department for Education and Employment on this matter.
