Tax Credits: Understanding childcare
One of the most important parts of the current tax credits system is the help it provides with childcare costs. This is done through the childcare element of Working Tax Credit which can provide help with up to 70% of eligible childcare costs up to a maximum of £175 for one child and £300 for two or more children. This means that the maximum support that a claimant can receive is £122.50 for one child and £210 for two children.
As well as being one of the most helpful parts of the system to claimants, it is unfortunately one of the most complicated. HMRC focus a great deal of their compliance activity on the childcare element as they believe a large number of errors are made in this area.
Updated 9 June 2016