The £100k childcare cliff edge - how is anyone meant to make this work?

Also in Wales you can’t salary sacrifice and pension contributions don’t count as the threshold is £100k gross. I have dropped a day, won’t pick up any extra responsibilities, won’t cover vacant shifts at short notice and will take unpaid parental leave to bring me under the threshold.

They should have called it a subsidy in the first place.

The government could have said "everyone who qualifies gets X hours subsidised to zero OR Y hours at £whatever off" to cover the fact that pre school education is beneficial (as mentioned by a pp) and that childcare's needed to work.

I was going to link to this! I love the IFS podcast although I appreciate it's a bit niche for most people. The one on depopulation was interesting too.

I really feel for providers. The funding rate clearly isn't enough but they're always railed on for desperately trying to make up the difference with extra charges... It infuriates me that the government claims they're offering "free" hours to parents.

This is actually a recurring rant of mine - that every financial interaction with the government is in the form of "hours", "credits" etc instead of just being honest and saying "we are giving you £x an hour off your provider's rate".

Google IFS podcasts ‘how to fix income tax’ and you’ll find the country’s most intelligent tax wonks bitching about how insane this system is, and how it disincentivises women from working (skip to 23 mins in if you’re short of time although the 5 mins before that is spent bitching about the 62% marginal tax rate madness that kicks in at £100k).

This is part of the issue though. People see nursery as “childcare”, when really, it isn’t, or it shouldn’t be. It’s early years education. It may not be mandatory education, but we do know a solid educational foundation laid down through play in early years (pre-school age) has a lasting impact on children’s attainment later (eg GCSE results).

Decent nurseries are also there to pick up issues with development and help parents access the support they need earlier. Eg making sure children with verbal delays access support sooner, which mitigates the risk of more serious speech and language issues later down the line.

Decent early years provision is of societal benefit. We need to start seeing it that way rather than as just a necessary and expensive means to get parents back into work, and with that comes the imperative to improve the quality of provision and the practitioners and to make it universally accessible.

It’s a dreadful system and it doesn’t work for providers either. I’m a childminder and the rate for 3-4 year olds is so low that I now don’t offer funding for that age group.

The 100k cliff is a problem even without childcare due go the stupid was tax works and the clawback of the tax allowance.

And you are correct it sounds like loads of money, especially when you have a lower household income. But it’s actually not that much, ESPECIALLY in the SE. And to fund childcare of 2.5k per month out of that. Yikes! How do women in the SE work and have kids?!

Maybe it's because no one chooses to need the NHS or the Fire Service, but you do have a choice over whether you have children or not. You can also choose (depending on your age) to not have a second child until the first one is in school.

We don’t qualify because although I work full time, it’s a training course with a bursary and both parents have to be working and taxed. I find that nursery keep putting up their rate as there are so many people who do qualify for the full amount of free hours so we’re paying so much more to subsidise this. Universal childcare would be so much fairer!

someone I know is in this position they are single (by choice) earning £125k with almost a £30k bonus which sounds delightful on paper except everything over a certain amount is taxed 65%! I could hardly believe it when they told me. They have salary sacrificed their whole salary and bonus To get their earnings under 99k into their pension until their child goes to school just to get the 30 hours free funding. It’s completely unfair.

Thanks for the advice. I pay a large amount into my pension.
But some (particularly single income households) need the take home pay. And this is where the thread started. If you have one £100kplus earner. There is little incentive for the second parent to work also because the cost of childcare completely obliterates most salaries if you cannot access free hours. The stats show this particularly impacts women and increases inequality.
I have said it before but I will repeat - many reports show funding childcare would have a net positive impact because of associated tax receipts and keeping women in work, with a continuing career trajectory.

On the last thread about this, someone said doctors can’t put more into their pensions because they don’t work like that so that’s why so many go part time. It’s absolutely fucked if you can’t work full time as a dr and afford childcare and I can’t believe the snidey comments about cutting your cloth. Would you pay 20%+ of your salary out on something the vast majority are getting for free? And feel grateful for the privilege? No you would not.

I don’t think it’s a huge incentive for most people to only only be able to reap the rewards of your income in 25+ years - and that this is dictated to you by the government.

In London / the South East, housing is extremely expensive. People want the money now, to provide X quality of life to raise their children - afford a house, that kind of thing.

Also - from a policy standpoint this makes no sense anyway, as they both lose the tax on that income AND have to pay out for the childcare… so lose out financially.

This, plus first time buyer stamp duty holiday buying a literal shed in London. People in this bracket are literally shafted every which way they turn. We can’t afford to put the extra into pension when we’re paying extortionate rent and being robbed blind for childcare plus trying to save for a deposit. How is it possible??

What's discentivising about chucking a bit of extra cash in your pension? Anyone sensible would be doing that anyway

But (at the risk of repeating myself and others) why would anyone think a system disincentivising work is a good idea? Sure, you can salary sacrifice, drop to 4 days (I have done both) but what about this makes any financial sense for tax revenues?

Totally correct! The reason is, that the government assume that the lower earner ie the woman can just be a housewife like the 60s. And that £100k is enough for a family of 3 or more to live on in London…

Shhh. Don't give them ideas...

The £100k income limit was introduced when eligible 3&4 year olds first became entitled to 30 hours in September 2017.

Well done for wholly failing to understand the issue…!

Perhaps you would prefer the old system we had, zero support! 15 hours from age 3 is universal

I have a few friends in HR roles too (or talent acquisition as they like to call it!!) who are on 6 figure salaries.

What we we need is "State" nurseries like we have "State" schools. Part of the issue is that all commercial businesses need to make a profit or they won't exist.

(Also... why is it only childcare people think should be means tested? We don't say people can't use the NHS or Fire Service if they earn more than a set amount for example)

That's what other countries do? What people think is ridiculous is paying for other people's childcare hours while not having access themselves. (And I say this with an annual income nowhere near 100k or even half that)