The Nanny Tax Credit

From April 2005, many parents employing nannies should benefit from tax breaks ending years of discrimination in favour of those using nurseries and childminders. This extension to the current Child Tax credit is complex. We take a look at what's on offer and how you can claim.

Who can apply?

The Child Tax Credit is being extended to cover carers who look after children in their parents' homes such as nannies and friends - but not relatives such as grandparents as it would be "inappropriate" to bring money into family arrangements, ministers say.

The credit, currently available only for nurseries and childminders, will also cover children's activity clubs and holiday clubs offering sports and other activities are to be included for the first time.

Families earning up to £58,000 a year will be eligible to claim it.
The amount the tax credit is worth varies according to how much a family earns.

How much is the Tax Credit worth?

It can be worth as much as 70% of your childcare costs, up to a maximum of £94.50 a week for one child and £140 for two.

So, do I qualify?

Remember this is a benefit - an element within the Working Tax Credit - available to families with one child, earning up to £32,000 a year or those with two children or more earning up to £43,500 a year who pay for some form of eligible childcare. Both parents in a couple, and single parents must be working at least 16 hours a week to qualify.

You can get advice on tax credits and claim forms from any tax office at www.inlandrevenue.gov.uk/taxcredits or by calling the tax credit helpline on 0845 300 3900.

Child Benefit Centre  tel: 08701 555540  text phone  0191 2251833

Child Support Agency tel: 08457 133 133

Family Credit Helpline 01253 500050

General benefit information

Click back to read about:

• Family Tax credit
• Child Benefit
• Families with special financial needs
• Single parents

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