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As a new year approaches many of us are contemplating how to control our spending for the coming year. Yet evidence suggests that we don't give enough thought to making the most of the money we're entitled to from the government. With our busy lives it can be hard to keep up with new schemes and constant changes; however, the fact remains that it's your money and it could make a difference to you and your children. To help you understand what's on offer, we present an overview of the three key areas that parents need to know about.
Child Trust Fund:
Every child born on or after 1st September 2002 is entitled to a voucher from the government worth at least £250. (There is also the option for a further £250 to be paid directly into the account if your family receives full Child Tax Credit).
- The money is deposited directly into an account belonging to your child.
- It can be added to but can't be touched until they are 18, when only they can make a withdrawal.
- If your child was born on or after September 1, 2002 and lives in the UK he or she is eligible.
Opening a Child Trust Fund account is easy. All you need is the voucher which the government will send to you. It's worth remembering that you need to open the account within 12 months of receiving the voucher, otherwise the government will open an account for you (which you can move to another provider). Key points to consider when opening an account include:
- The fee for running the account
- Whether you have to put money in regularly
- The likely return on the money you are investing.
Child Tax Credit:
Nine out of ten families with children can get tax credits. Child Tax Credit is paid to families with children regardless of whether the parents work or not. It is a means-tested allowance for parents and carers of children or young people who are still in full-time education. Basically all families with children can claim Child Tax Credit if their income is no more than £58,000 a year (up to £66,000 if you have a child under one). You don't have to be the child's parent to be eligible, but you must be the main person who's responsible for them. Means-testing is based on your earnings, your partner's earnings and the number of children in your family. Unlike the Child Trust fund you will need to make a claim for this benefit.
Working Tax Credit:
The Working Tax Credit is like the old Working Families Tax Credit (WFTC) in that it pays in-work credits to people on low-incomes. It is paid via your salary. Working Tax Credit is designed to help people on low incomes whether they are employed or self-employed and can include support for qualifying childcare. Extra help is available for people working 30 or more hours per week, disabled people, or people over 50 who recently returned to work after a period on benefit. To claim Working Tax Credit, you have to work for 16 hours or more a week. Usually you have to live in the UK, but you may still qualify if you live somewhere else.
You will need to provide information relating to the different elements that make up the allowance, including:
- Your earnings and the average number of hours you work a week
- Your partner's earnings (if you have one) and their average hours of work
- Any benefits you may be claiming
- The number and ages of children in your family
- The amount you spend each week on childcare
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