Some early years providers claim parental debt is forcing them to use the childcare element of their Working Tax Credit fraudulently, leaving the childcare profession at the bottom of the list of creditors chasing unpaid fees. The Treasury disputes this, but is in the process of responding to a consultation, Tax Credits: Improving Delivery and Choice, on simplifying the system, as it appears that too few truly understand it.
What is the childcare element of the Working Tax Credit?
Working Tax Credit is how the Treasury supports working people on low incomes by topping up earnings. There are extra amounts for a number of things including the costs of registered or approved childcare. The childcare element can help with 80 per cent of eligible childcare costs up to a maximum of £175 a week for one child and £300 a week for two, depending on the parent's salary. However, there are a large number of conditions affecting eligibility. For all the details go to www.hmrc.gov.uk/leaflets/wtc5.pdf
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