Should the government make all childcare payments tax-free?

I think the current salary sacrifice limit of £243 a month is ridiculously low given how childcare costs rise year on year, but I'm not hopeful Cameron's goons plan to do anything.
It's ridiculous. I'm not getting into a debate about SAHMs/working parents, but from a purely economic perspective, both parents working and using childcare means that there are 3 people paying taxes, not one.

I've had my second child so we're really looking at the options now, as we're in the position that one of us will be working for nothing. I have quite a stressful job and DH's company are awful when it comes to flexibility when DS was ill, which rarely has happened and he always made the hours up or took them as annual leave so it's not just the cost, it's the whole quality of life issue now.
What also really, really pisses me off is that you're at the mercy of employers if they want to set up a voucher scheme or not. Luckily, my company does as it's a big multinational. DH's employer is much smaller, and at the time he was the only one interested. I did all the research about the scheme (this site was invaluable in that respect), printed off the brochures of some companies who offered it. It took a year for them to get their asses in gear and do the 30 minutes admin work required to get it going. The MD didn't give a fuck, the accountant said he was too busy, and when DH enquired politely as to the status he really was given the bums rush. A senior colleague intervened, and they finally looked at the stuff I'd given months later, but their delay cost us £1,000. It should be compulsory to set it up. I'm an accountant myself, and for crying out loud if I could save someone £1k a year and the company a few quid in NI, by doing 30 minutes work, of course I would.It kills me that because we were reliant on a lazy waste of space to do it, we lost that much money.

I think something has to be done. Ok, chances are the cost of making ALL childcare tax deductible is too high, but certainly raise the present limit.

I wouldn't support it for all childcare and I don't see how it works with the way the British tax system is set up.

I like the French system but it only works because we don't really do PAYE, everyone submits a tax return at the end of the year and you get a 50% rebate on the cost of a nanny or CM. 100% would mean the price of childcare spiralling out of control.

However vouchers could be extended and the same amount should be deductible for SE professionals to use on registered care.

Oh well, enjoy those 15 months. Spend it on lots of hugs and cuddles - they're still free, until someone works out a way to tax them, along with the air we breathe. Work is good, but time spent with little ones is priceless.

Ah, so I could just about shave 6 months off the time before I go back to work? As DS1 starts Secondary in Sept 2013, if DS3 gets the Nursery vouchers then, he will be 2y9mo, and I can go and find a job. Any job!

So I've got 15 months before I can go back. That sounds much better than 22 months! Still a while, though.

It's Sept 2012 for 10 lucky areas and Sept 2013 for everwhere else.

I know how you feel - the year I got married and had dd1 was the year they aboished married couples allowance, but didn't bring in child tax credits for another couple of years. So just when I needed the money, there was no support at all.

Not my area at all. September 2013 for those areas, so by the time it gets to my area, he will already be over 3yo. Which means I still have to wait to go back to work until Easter 2014. Feck.

All I want to do is go back to work FFS.

Would massively improve Tory vote among women. Oops, shouldn't let on - don't want Tories in for another term.

cardymow - does this help? Says which areas will get childcare for 2 year olds from this year and which from 2013 -

www.bbc.co.uk/news/education-18248658

I digressed a little in my earlier post, and was talking about the Government's idea to extend the free 15hrs a week if child care to 2yo's whose parents are on a low income.

A salary sacrifice scheme is of no use to NMW / very low earners, as they just can't afford to sacrifice ANY of their salary, and if you DO do the salary sacrifice scheme, you can't claim for help from Tax Credits at the same time.

Hence me trying to illustrate that I am hoping that that idea does become a reality sooner rather than later, as it is the only way I can get back to work before April 2014.

Yes, salary sacrifice schemes for child care are a good idea if your combined household income means that you don't qualify for ANY help from Tax Credits, but they are useless for NMW / low income earners. Extending the free 15 hrs child care to 2yo's would enable me, and a lot of lone parents I know, to get back to work a full year earlier than they otherwise would.

wahtthewhat - not sure i understand your point? isnt that what i said in my thread?

YES

And - hello Gideon. Jolly good idea to run your ideas past the electorate first, bet you wish you'd done that with the pasties now eh?

I just want to know if the government is actually going to start doing the vouchers for the free 15 hrs a week for 2yo's. If they are, then I can go back to work in April 2013, if not then I have to wait till the Easter afterwards, because of when DS3's birthday falls. I need to get back to work, but can't afford the top up for nursery as well as after school care for two other dc.

Yeah, I know TC's pay 70% of it, but when it's for nursery for one dc AND after school care for two, the Maximum £210 a week they pay only actually works out as 55%, and the remaining 45% is actually more than I can earn!

I would be about £5 a week better off than on benefits though, after FSM's, rent, child care and council tax if only I got the 15 hrs free. They don't make it easy for NMW workers to go back to work, do they, with the cost of child care.

I agree with breadandbutterfly.

definately unfair if still the same arrangement as when we had a nanny. we had to employer her as if we were a company, so paid her 2 sets of NI plus tax, but my husband's company wasn't allowed to pay her as an employee. so we couldn't pay her pre tax. so overall, paid 3 sets of NI and 2 of tax to employ her, which seemed excessive.

about 1/3 of our income goes on childcare. Having that tax free would make a huge difference to our lives.

Bonnie, your husband could argue that they are not making the scheme available to all staff - it is unusual for a company to be so inflexible - usually if they have a strict time for joining, they will allow people to join throughout the year if they have a 'lifestyle change' - DS starting nursry would generally qualify.

Also you are not paying for the vouchers as such - salary sacrifice means reducing your salary and receiving a benefit of a corresponding value - if you join the scheme on maternity leave you are not receiving a salary, but your employer has to provide the benefit regardless, so effectively they are paying for it...

Yes - in virtually all other developed countries childcare is either free or at worst paid for from tax-free income. Childcare inthe UK is some of the most expensive in the world.

QueenEdith - this has a knock-on effect - it is yet another disincentive for people to go out to work - so costing the state lost taxes - plus it has a long-term effect on the children, whose care ought to be one of our primary if not our main focus, but who are instead looked after by parents exhausted from working shifts, who skimp on food, heating etc to ay for childcare - it is a national disgrace. It is a very short-term saving but far more expensive in the long run.

How much would such an extension to the scheme cost?

As there is no spare money in government, what would you reduce funding for in order to pay for it?

He has questioned it but he works in a huge faceless organisation and they won't change it for anyone!

How annoying Bonnie. It does save a lot. Could your husband question this? It seems very unfair. No point in offering a benefit if you can't benefit from it!

That's rough, Bonnie as you could have saved them up too. Between us it saves DH and I about £2k a year I think. The govt need to do something about this SOON. Would be a very easy way for them to help parents in real terms, encourage people back to work etc. It's a lifesaver for us and we'll probably hold on to them when both LOs are at school as you can store them up and pay for holiday clubs etc.