Something funny happens when you have kids. Although the new addition to your house is not even a 10th of your size, your bank account starts to drop at about 10 times its usual rate.
It makes sense, then, that families want to qualify for all the help they can get. There's paid parental leave or the in-work tax credit, and Working for Families. But it's the latter that I've seen cause some problems.
Working for Families tax credits are calculated on the basis of household income and the number of children a family has. But for self-employed people who have to forecast their income for the coming year, or those whose circumstances change through the year, it can be problematic.
I have dealt with people who have got seriously into debt because they underestimated their income and were paid more in Working for Families credits than they should have been. They did not realise the mistake and spent the money, then realised that they had to pay it back, including interest and penalties.
Some of the addbacks to your income for the purposes of the calculation not only include income in companies or trusts and business losses, but soft loans from family members.
