Childcare tax credits 'a mystery to many'

09/12/2009

Many young families are simply unaware that they are eligible to boost their incomes through tax credits, leading to unnecessary money problems.

This is the view of the Daycare Trust, which identified childcare tax credit as a particular source of confusion among the general public.

The credits, which come in the form of vouchers worth up to £55 each week, are designed to ensure that parents receive assistance to offset costs associated with bringing up their children.

Emma Knights, joint chief executive at the Daycare Trust, said: "One of the things that parents miss out on is the fact that childcare tax credit exists. It's part of the working tax credits system, which I know is complicated – and that is why, I think, a lot of parents miss out on it – but it goes a lot further up the income bracket than people would expect.

"If you are a family who is paying for childcare you should absolutely check your entitlement."

Kevin Still, EuroDebt director, commented: "It has been established that many basic rate taxpayers are struggling with their finances and many require two incomes to support household expenditure. Any contribution to income is critical in difficult times and many people unfamiliar with the benefits system may be missing out. One of our priorities as a debt solution provider is to help people in debt to maximize their income."

Gordon Brown recently said that the childcare voucher scheme would be reformed in 2011, with higher-earners who pay 40 per cent in income tax having their tax relief halved.

All existing members of the scheme, and all basic rate taxpayers, will be unaffected by the changes.

Tags; Income Worries and Debt, Young Family Finances,

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