Context: Jay and Kay are a couple with two young children, Mae, aged 9 months and Faye, aged 2. Kay has been on maternity leave and is due to go back to work full time in the local library. Jay is employed full time in a clay workshop. Both parents are in their mid-thirties and live in Grays, Essex. They are looking into arranging childcare once Kay starts work again.

Both children could attend a local nursery full time nearby from Monday to Friday, at a cost of 528 per week for both. Kay also receives child benefit, equating to 1,827.80 per year.

2.4 The household is also considering a second option, whether Jay should stay in full-time employment, with the children going to nursery full time. Jays income net of tax and National Insurance would then be 16,261.20.

Using the Tax credit calculator where appropriate, work out their tax credit entitlements and net household income after childcare under this option, and compare the short-term financial situation of the household with the previous option (i.e. Jay going part time; see your answer to Question 2.3). (5 marks)