View Full Version : How to change tax credit mid year?

16-07-2013, 06:37 AM
Hi can anyone help as we are going in circles here.
Mum needs to cut hours to save money.
She has been paying a set amount averaged thru holidays and term time . She wants a new arrangement for the summer hols and a new amount from new school year as one child starting new in sept.
Tax credit needs April to April averaged amount.
How do we account for the money lost by a too high average being paid so far?
Very confused here!!!!

16-07-2013, 06:48 AM
Just call them, they will ask what you've earnt April to the change and what you will warn after the change in income. They do the maths :)

Bumble Beez
16-07-2013, 06:56 AM
Work out what her new fees will be until next April, give her the figure and all she will have to do is phone them up.
She needs to tell them that her childcare costs have changed...
They'll ask for a new figure and it'll all be recalculated by them...

Sarah x

16-07-2013, 08:22 AM
I really didn't read original post correctly lol

24-07-2013, 06:16 AM
We have gone round and round this.

Tax credit will not work it out for us.

The family have paid too high an average since last September as they thought they'd use me full time for the summer holidays and that has been hugely reduced now . It transpires they have paid £19 a week too much for 47 weeks.

Is it fair that this should now be deducted from my already reduced new amount? It amounts to four hours a week non paid child care for 47 weeks or refund £847 which I don't have.

Advice or ideas much appreciated.

I can't believe tax credit won't help work it out. They must have this all the time.

24-07-2013, 06:21 AM
Can they not let you pay back a little a month seeing as that's how you received the money originally? They can't expect anyone to get back that much money, and offering free childcare is virtually the same because your working for nothing!

24-07-2013, 06:43 AM
Thanks Charlotte

Yes the obvious solution is to deduct £19 a week from now on for nearly a year - but as I am now getting less than £100 a week from them and still doing lots of bits and pieces of childcare through the week for their three children, I know I will feel resentful about this.
Do I have to just bite the bullet? :(

24-07-2013, 06:53 AM
Just make sure you charge fully for all childcare and then deduct the £19. I would tell tax credits the actual amount being paid and not mention the £19.
On hindsight I will never average costs over the year as recently I had a child finish 3 months earlier than planned due to mums pregnancy and I lost money.

24-07-2013, 07:57 AM
Jadiva - are you sure you've worked it out correctly?

Do your payments go in line with the tax year, or from parents start date annually?

I work from April to March so payments are in line with my accounts and also TC's
For a parents change in hours mid year, I work out what their hours and payments are to date, less any monies already paid, to give me an under or overpayment figure
Then for the rest of the year to April (or their annual date if you do that) what their new hours and payments are in total.
If they have overpaid to date, deduct that from the new hours total, then divide that figure by however many weeks are left in the financial year, (or to their 'annual date')

If you are working to 31st march, incl this week, there are 37 weeks left in the financial year.

You shouldn't be concerned about what the parents are receiving from TC's, only what your payment are/should be. If the parent receives more of a shortfall from TC's as a result of the change, they should make that up to you themselves from their wages.
If the shortfall is due to an overpayment to you using a similar calculation as above, then you'll have to swallow it I'm afraid.
Did you also factor in your notice period for changing hours? I have 4 weeks notice for changing hours so the first 4 works are still charged at the old rate even though new hours are being worked - would that make a difference to your calculations?

24-07-2013, 08:43 AM
I think I may have missed something somewhere along the line. The way I understand it from your post a parent of one of your mindees has been overpaid by tax credits by £19 per week.
I don't understand why you need to pay it back. Tax credits go direct to the patent then they pay you.
If the parent gets an overpayment because they have changed the amount of childcare hours they need that's not your fault!
Please correct me if I've read this completely wrong x

24-07-2013, 08:59 AM
We have gone round and round this.

Tax credit will not work it out for us.

The family have paid too high an average since last September as they thought they'd use me full time for the summer holidays and that has been hugely reduced now . It transpires they have paid £19 a week too much for 47 weeks.

I think this is what's causing the problem: Tax credits aren't at week 47 yet

What dates do parents fees run from and to?
From the start of the contract date to the anniversary a year later, or from their start date to April for the first year, then April to April (31st March) from year 2 onwards?

TC's will want the amount of fees paid from September last year to 5th April this year as one amount which is last years claim, and from April 6th 2013 to April 5th 2014 as a total amount for this years claim.

24-07-2013, 11:01 AM
so what you are saying is based on the hours mum predicted for the year ahead you averaged out to give a weekly fee but now she has dropped her hours you need to recalculate an average fee again because she is doing less hours
I would do another contract and do it a different way this sounds way too confusing and what if her hours change again? You tell her how much your fee is a week based on your contracted hours then she tells tax credits how much her weekly fee is going to be and they will award her apropriately they probably will not give advice on how you can sort out what she has already paid to you it is uo to parents to sort out their fees surely? but if you are £19 down i would put her fees up to cover that lol

24-07-2013, 11:28 AM
I have a similar situation where the two children I have on tax credits (funny that) have reduced their days for the summer holidays meaning I now have to work for free to cover the over payment. Unfortunately my year runs from September to August so this could happen again.

24-07-2013, 11:33 AM
I think I understand what you mean now lol.

They way I do it with all families is give them a fee per week, I insist on set hours. They phone tax credits & inform them of weekly fee, tax credits pay them, they then pay me.
Any over payments are then down to the parent to sort out & I am never having to work for free to cover any over payment they have had/made to me.

24-07-2013, 03:07 PM
Yes but tax credit insists on averaging out the year don't they? I see what you mean though - only accept each week what they spent...

24-07-2013, 04:37 PM
I see what you have done I had to read it several times the holidays are longer hours than term-time so youve added up all the hours and and divided it over 47 weeks as you have 5 weeks off. How many weeks would of been left of the current arrangement?

24-07-2013, 05:58 PM
I have 3 parents use tax credits, I also used tax credits when my son was with a childminder. All they asked was my weekly fees then paid me a percentage.

24-07-2013, 08:55 PM
The 5 weeks left would have been the most expensive (for them) as its school holidays. in the event, they have changed to less hours so have paid too much all year on average.
Would you pay it back?
It seems unfair somehow

24-07-2013, 08:57 PM
I would not pay it back but I dont know where you stand contractually when did they notify you of the changes? my contract says 4 weeks for any changes to contract x

24-07-2013, 09:05 PM
Unfair or not, it was what you agreed to at the time (sorry), however, as mentioned before, check your contract, how much notice do you require to change hours (4 weeks is pretty standard)
You have every right to insist on contractual obligations being adhered to

24-07-2013, 09:13 PM
This can be the issue of pro rataing the fees out over the course of a year :(

I'm assuming you have agreed to the change in the contract so yes you do owe them the £19 a week as they have overpaid you for the last so many weeks :)

25-07-2013, 08:33 AM
glad i read this one we do this for 2 of our families but luckly they don't receive tax credit

for the ones that do claim tax credits we just gave the weekly fee and if they are in school one fee for term time and the one fee for school holidays


25-07-2013, 09:22 AM
I may of felt inclined to not change the contract until September then the 5 weeks that they wanted to reduce their hours for I may of paid them back the difference or carried them over to the new contract x

25-07-2013, 11:54 AM
I have a notice period of 4 weeks to change hours so I wouldn't have allowed the change until the end of the holidays. Even though you've agreed to averaged hours at the start of the contract, it does seem unfair that for mum to save money, you're going to losing out on money. If you've got a notice period in your contract then I'd definitely enforce it.

Tax credits don't need an average, they will normally just change the amount they pay once the childcare amount has changed. Parents just need to phone up.

I would let mum worry about the tax credits side of things and you concentrate on working out payments with mum. The tax credits has nothing to do with you, if they've overpaid mum then that's for her to pay back not you.

25-07-2013, 01:04 PM
We have got round it by charging full retainer fee not half which I am in my rights to do.
However I have been warned and will do weekly from now on.
Thanks for the advice x

25-07-2013, 01:12 PM
Fab I am so glad you have sorted it out xx