Active discussions

Help protect children from gaming harms.

Take our survey

Please or to access all these features

Talk
Politics

See all MNHQ comments on this thread

Original poster

Can we get George Osborne on here to explain why childcare is not tax deductible?

65 replies

Strix · 08/07/2010 14:28

And by "tax deductible" I mean working parents should not have to pay any tax (income, NI, etc.) on the income which they use to pay for childcare.

Scrap the childcare vouchers which result in a pension reduction, and just work out what our taxable income is AFTER the cost of childcare is subtracted.

Childcare is after all a cost incurred for the sole purpose of going to work.

And, it would help keep people in work because it would be more affordable for lower and middle earners to actually go to work.

OP posts:
New posts on this thread. Refresh page
StewieGriffinsMom · 17/07/2010 09:50

This reply has been deleted

Message withdrawn

flockwallpaper · 14/07/2010 20:20

This is a great idea. My friend in the states gets tax deductions for her children. Why not here?

Original poster
Strix · 13/07/2010 14:09

So Justine, have you talked to George?

OP posts:
WidowWadman · 12/07/2010 22:45

"I don't think this one is a starter, to be honest. Using 'childcare costs' as the benchmark effectively discriminates against those with fewer children and those who are SAHPs."

But SAHPs don't incurr childcare costs, and those with fewer children have a lower bill, too.

It's not discrimination, but help for people to stay in paid work, which those who choose not to be in paid work don't need.

By helping people with childcare costs, they help people getting a taxable income which is good for the public purse. Plus the taxable income the childcare workers earn. So it's really a no-brainer that the state should invest more into support with child care.

peppapighastakenovermylife · 12/07/2010 18:35

In countries such as Sweden isn't childcare subsidised and it all works out fine?

abdnhiker - exactly!

abdnhiker · 12/07/2010 12:51

Financially this could actually be a great long term revenue-generator for the government - I'd still be at work and would be paying a bit of money for taxes plus my childminder or nursery worker would pay taxes and I'd be making more for the rest of my life than I will after my career break.

The government should explore the costs anyways - if lost money is the same as spent money then the current policy means they've lost money on me...

And chil there's plenty of us who were in the middle - no tax credits but a salary less than two kids in nursery after tax... This is not a benefit for higher earners but those of us between 20-35K a year!

Many of the negatives I've seen like this one: "if they only work 16 hours a week but use 30 hours childcare so they can get shopping and chores done or go to the gym this could not be tax deductable as it is not a cost associated with working but with leisure" are already happening with the tax credit system - I knew several women who had 25 hours of childcare but only worked 16-18 hours and since 80% was paid for with tax credits, could afford to leave their kids in childcare. It made me furious since it was my taxes that subsidised their childcare and I worked 22.5hours to pay for 25 hours of childcare and was losing £20 a month... Plus making it tax deductible would still mean I'd pay around 72% of the costs, compared to low income tax credit help which leaves the parent with 20% of the costs - so if that system is okay why do you assume that when I'm paying 72% I'd abuse the system?

Original poster
Strix · 12/07/2010 10:26

I'm not sure I accept that making childcare more affordable for parents automatically results in the providers raising their prices. Can you point me to the evidence?

It is not the same Giddy because the money was mine to start with, not theirs. It is not like I am asking them to give me something someone else earned.

The fact is the extorionate cost of childcare in this country keeps people from going to work. And if the government really supports people getting back into work, then they need to acknowledge the real price of childcare, much unlike the previous government who used to claim the annual cost of childcare was much lower than it really was/is.

OP posts:
GiddyPickle · 10/07/2010 17:59

This reply has been deleted

Message withdrawn at poster's request.

tribunalgoer · 10/07/2010 13:41

This reply has been deleted

Message withdrawn

Original poster
Strix · 10/07/2010 13:07

"Better to cap childcare costs and invest in childcare services to keep them affordable. "

I'm sorry it took my a while to reply to this one because I was rolling on the floor laughing at your fabulous joke. Surely, you don't REALLY think childcare is currently affordable?

I think a n ursery costs somewhere around £12k per annum for one child. Dounle that for two. And, for 3... well, really, you are looking at a nanny or goving up work unless you are in the top 1% of earners in this country. I just cannot get my head round the idea that having a family and a job should be a luxury for the poor and the very wealthy. But, sadly, that is whre we are.

Justine, Thank you. I shall look forward to my chat with George.

OP posts:
peppapighastakenovermylife · 10/07/2010 13:05

Come on George!!!!

And whilst you're here could you please explain the logic of this for me.

If I continue to work full time, now that you have removed our tax credits due to us earning just over 40k, I will be around £300 a month worse off than if I drop my hours to 0.5 and thus become eligible to claim tax credits again

So scenario one I work full time, pay you more tax and keep a nursery worker in a job and barely make ends meet whilst being run off my feet.

Or scenario two I work half time, pay you less tax, claim some benefits, probably lose a childcare worker their job but I am better off, less stressed and the children see me more (and me happier).

Original poster
Strix · 10/07/2010 12:59

"Getting the state to fork out..."?

Surely you jest. The whole point is that it is my money, I earned it. I hardly regard that s the state forking out.

If childcare was tax deductible, more people could afford to go to work and pay tax rather than staying home to look after their kids because going back to work is not financially viable after looking at the extortionate cost of childcare. I't hard to imagine a world where it would become more expensive because it became barely affordable for the vast majority of normal people who just want to hold down an average job.

And if nannies qualified for such tax deductions, I think you find a whole lot more of them on the books rather than being paid cash in hand (as so many of them are). A lot of nannies make £20k, 30k, even more. Hhow much tax is the government missing there?

OP posts:
tribunalgoer · 10/07/2010 06:18

This reply has been deleted

Message withdrawn

sarah293 · 10/07/2010 06:13

This reply has been deleted

Message withdrawn

GiddyPickle · 09/07/2010 19:01

This reply has been deleted

Message withdrawn at poster's request.

Haliborange · 09/07/2010 18:51

I would like to know if George Osborne knows how much it costs to legally employ a full time nanny in London, i.e. how much a parent has to earn to make it worthwhile going to work at all.
Put it this way, you wouldn't have much over each month if you were on an MP's salary...
The figures are truly shocking, and if childcare was tax-deductible, I could spend the money I would save elsewhere, and that might just be good for local businesses etc.

MNHQ
JustineMumsnet · 09/07/2010 18:41

We'll ask!

sarah293 · 09/07/2010 08:35

This reply has been deleted

Message withdrawn

GiddyPickle · 09/07/2010 08:22

This reply has been deleted

Message withdrawn at poster's request.

blondieminx · 08/07/2010 23:36

hear hear! Mumsnet HQ any chance of getting Mr O over to anser a few questions?

Congrats to Strix btw!

Original poster
Strix · 08/07/2010 16:54

It doesn't need to be complicated. If I make £2000 in a month and spend £1400 on childcare, then work out my taxes based on an income of £600. There is one additional calculation (subtracting 1400). Not at all complicated.

If I have a nanny, they will know that because she will be registered as my emplyee (and people who haven't registered their nanny as their employee can rightly miss out on the tax break -- now wouldn't that be fitting!)

Any other form of childcare will be have bills bills paid.

Easy peasy.

And tax credits even to low paid workers don't cover all of childcare.

OP posts:
Ewe · 08/07/2010 16:41

I love the idea but a couple of things make it unworkable.

  1. It's be a bloody nightmare to implement and manage, adding loads more people to the tax credits system as effectively that would be only way to do it.

  2. Lower earners/single parents get part of the cost subsidised by these tax credits anyway, it's be a benefit for higher earners which is rarely a popular policy issue.

  3. It would open floodgates for other things to be tax deductible for working, discriminates against child free families etc. How would it work for people who pay parents to look after children? If payable to people without qualifications/registrations with ofsted open to abuse.

I'd be bloody thrilled though!

Original poster
Strix · 08/07/2010 16:35

"BTW Paying nannies cash in hand is just tax-dodging and exploiting workers. No justification for it."

I agree. But, as you say, they do have to cut their cloth.

OP posts:
Chil1234 · 08/07/2010 16:33

People on moderate salaries always have to cut their cloth. Either means living somewhere cheaper, limiting family size, working fewer hours, using grandparents for childcare, or whatever they need to do. The ones on very low salaries get more help. And the ones on very high salaries shouldn't really need our help. The people you know who gave up work... how many of them are on the dole? Or are they now SAHPs?

BTW Paying nannies cash in hand is just tax-dodging and exploiting workers. No justification for it.

Original poster
Strix · 08/07/2010 16:17

I'm not being melodramtic. I am pointing out the reality that people do not have multiple child care options available to them. I know loads of people who gave up work because they couldn't afford the childcare bill. So they are no longer paying tax. I also know people who hire nannies cash in hand becaue it's the only way they can afford to go to work.

Childcare is too expensive. It is not right that people on average salaries cannot afford to have children and go to work.

OP posts:
Swipe left for the next trending thread