AIBU to think the £100k tax trap is unfair?

How are you funding that? Where are you finding the hundreds of billions of £?

The oldest one is still there - but, double the fun, I’ve got a second child there too!

So I paid the original sum, and the current sum - but now I pay it x2 too.

What about people like GPs, who work part time to avoid falling into this? The country needs all the GP appointments it can generate!

So that’s what it costs now.. not what you paid?

Tbh, I think all the frozen tax thresholds are unfair and far too low given the cost of living increase. However, people these days expect that the state should pay for everything, so what is the solution? 🤷🏻‍♀️

People I know have reduced their hours to be able to keep within the child care funding limits. Seems that three days per week is optimal (30 hours per week for 38 weeks per year) may have to pay a small amount which for many nurseries will include food and nappies.
The added bonus is being able to have time with children while they are young and maybe time to pursue own interests, get the house in sensible order even have some quality time with DP if both at home.
Yes the career slows down but eventually most children are independent to a degree.

People earning 100k plus have paid enough tax. Everything over the 100k should be tax-free.

Not slow enough as it causes a whopping marginal tax rate of 62% - higher if student loan repayments are also due.

It's incredibly poorly designed. This isn't my area of economics, but it's not something I'd design. The government claim that it's just too difficult to make it fair and it's all about simplicity, but I'm skeptical. I think they do it because it's a sneaky way of getting more revenue. I would design it with a taper at the very least. Personally I think child related benefits should be based on household income, because the current system is tilted against couples with large wage gaps. Typically the lower paid earner is a woman. Meanwhile a couple with the same joint income but an equal split would get free child care.

I don't currently live in the UK so it's not personal grudge. In any case it's not about those poor souls on £100k. It's that it hits this particular narrow band and then sorts itself out, so wealthier people are impacted less. It's hard to justify morally.

West London!

Three years ago, the most expensive nursery locally was £2100 and I remember being shocked by that. The cheapest was £1800 or thereabouts.

The £1800 nursery is now £2350. The ‘most expensive’ £2100 nursery in 2023 now is £2550. Most sit around that level.

We have two newish nurseries that charge £2700 and 2900 (the latter a brand with multiple across London).

The costs are spiralling like mad - I guess with the increase in wages, NI, rents etc. And so the lack of free hours is… punishing.

Great for you.

many people earning £100k have very little discretionary income. Most people earning that live in London, where housing is sky high. Throw in childcare and commuting they’re counting every penny. They have to do everything they can to get their salary under £100k as the numbers simply don’t add up otherwise. It’s not as though they’re buying expensive handbags etc!

Wow. Where on earth do you live? Thats more expensive than my area of London

But if we gave everyone a full personal allowance we’d have MORE MONEY for kids without beds etc.

£2350 at the cheapest near me, £28k a year.

Most over £2500 now - the most expensive is £2,900. So over £30k a year - after tax!

The cost has really escalated over the last few years.

Although the subsidy is unfair too. It requires both parents to earn at least the equivalent of 16 hours a week at the National Minimum Wage (roughly £131–£204+ per week) to get it.

I am a full time healthcare student. I have a part time job that’s variable hours… at minimum wage. So I may not qualify for the subsidy because I may not earn enough due to my learning and placement (see free NHS work) hours. But someone who works just 4 hours a week making say £50 an hour is eligible. How does that make sense?

How much was your childcare? Full time for one child near me is 1800 a month without the subsidy. At the cheapest nursery.

Especially because if both parents earn £99k (£189k household) you still get it. But if one earns £100k and the other £20k… you don’t.

What about elderly care, should that be free too? I paid 100% of my childcare, it's what I signed up for when I had a child and I dont want to pay, via taxes, for other folks childcare now.

I went over the threshold this year due to a substantial redundancy payment so I am currently paying high tax in a minimum wage job as I try to start a new career. Generally I am happy to contribute through my taxes but that definitely stings! Thankfully we're out of the childcare years so don't have loss of childcare funding to deal with on top.

It’s this which is the main issue I think. I am a good example of those most affected. I’m a single parent, have earned between £100-120k for the last few years and would have had very high childcare costs without tax free childcare (around £2.5 -£3k a month at points). Even on a net monthly salary of c£5.8 this was unaffordable. I was far better off working 4 days and keeping income under £100k.

Even if you think it’s fair that high earners pay something for childcare and generally pay more tax, the current system is bad for the economy and could easily be redesigned to remove the cliff edge.

Yes, absolutely - how have we possibly come to a situation where people are worried about the prospect of earning more money, because that would mean that they no longer have as much money in their pockets/bank accounts to pay for their bills and essentials as they had before?!

It makes people like me cut their hours to -
avoid.

basic tax should be £35k

higher rate around £70k

cut off about £125k, with no cliff edge

But the children are already here: people who exist as members of society, who are of an age where they still need to be looked after. That would be like scrapping free schooling for children and the government retorting to their parents "Well, nobody forced you to have them".

And considering that the taxation and benefit system is all-encompassing for the country as a whole, whilst it's true that having children isn't compulsory for any one individual, it is kind of compulsory for society as a whole, if we don't want to just come to an abrupt stop - or indeed to ensure that those who become too old to work and live independently without there being younger people to do all manner of mundane tasks for them can be looked after.

I’m in the £100-145k tax bracket and the idea that we shouldn’t have progressive tax systems is ridiculous. All my additional income is discretionary - I can easily cover my outgoings and so it makes sense to tax me at a higher rate than someone struggling. I should be contributing far more.

I’m with pp, it’s annoying, I don’t love it, but I can afford it. The bigger issue is I moved to four days when my kids were little to bring my income down and I’ve never gone back up because when your marginal tax rate is 60-80% it’s not really worth it and I like working 4 days now I’ve got a taste for it. So there’s an ongoing productivity hit which presumably has an economic impact.

Other benefits are already based on household income. Why not child related benefits.

You are back to front. Its only a snall percentage of highly paid women who are benefitting currently from some things being individually assessed.