New childcare tax break to be announced by the Government today - what do you think?

It is a step in the right direction but I do think that if both parents are working the cost of childcare should be fully deductible against household income. For those families who have a parent stay home, I think they should have an allowance set at 35hrs a week at minimum wage. At least they are trying to fix the problem. It is the first step of many that need to be taken.

I've just started a new job with a charity. So far I've never yet worked for a charity that deals with childcare vouchers, because I'm guessing there is an admin charge for the employer. So I'm not holding out much hope of getting vouchers under the current system. DH and I are probably just outside the joint income that would get any help via child tax credits, so we won't get help there. If the new system is to claim childcare costs against tax (up to £2k as suggested in some papers) then given the rise in personal tax threshold, how would that work as a part-timer (me) or for someone who is self-employed (DH)?! At least Child Benefit is simpler... I hope they don't remove that totally while shaking up these other things as then I will be paying to work (ie work bringing in LESS than the cost of childcare - it currently just about balances out).

Sigh.

Vivienne yesterday on Pm it was suggested changing the rules on pension tax relief for well-off pensioners would cover the cost

It was a think tank man not a gov official, but t was interesting

Free state child care for everyone would simply cost an absolute fortune and the only way to raise the money would be taxation. Still on the other hand maybe if Tesco's and Starbucks paid their share things might be fairer for the rest of us.

Mellie - what exactly has your DH looked at - no details have been released yet?

Dh has just looked at it and essentially it looks like another version of child are vouchers

No thank you.

It's another cut disguised as something new.

Get lost Cameron.

Also very good points raised by Olgaga on page five.

LilyBolero I agree with everything you said on page five. Where are all these jobs too? Surely a SAHP, whether a Mum or Dad, frees a job so why are they trying to force us on to the production line? DH is just into the higher tax threshold, but knows colleagues who have turned promotions down, male and female, because they would be worse off.

definately not in favour if it effects child benefits. i dont use a registered cm but use my cb to pay petrol and costs for my dm to have the dcs. it wont help us at all :(

Would be nice if it really isn't means tested. Probably some other restriction which means wouldn't help us, though.

I'm looking at min. wage jobs after a 8year break from working for others, and it's hard to cover childcare costs. Even jobs that pay £7-£9/hour I'm only going to net £1-£1.50 per hour, if I'm lucky. Not that I'm qualified for any of them, either, not until I fork out £600+ to get the right NVQs or software training.

What I don't like is the muddled policy. UK very highest tax rate 1970s was 99%. Even my father modestly paid state worker paid 63% upper rate and 15% on top of that on savings interest. There were a raft of allowances and discounts and a child tax allowance per child. You could set your mortgage interest against tax at highest rates and there was no pension fund upper cap. It was high allowances, high tax system.

Lawson sensibly eventually reduced upper tax rate and NI to 40% (now 52% until April) and we moved to two simple tax rates - lower and upper and got rid of some fairly complex tax allowances. That was tax simplicity. It worked well. Tax receipts went up and it made sense and I still favour it.

Roll on a bit and Labour introduced more complexity. They made 90% of parents benefits claimants - tax credits (which I never got as I earned too much but those under £60k got) and all kinds of complexity and a 10% tax band for a time.

We seem to be in a total muddle over what tax policy ought to be. If we want to mvoe people off tax credits and child benefit and housing benefit when they are in work then employers would need to increase wages and perhaps tax rates and employer NI could go down. We could abolish entirely tax relief on charity contributions, pensions, ISAs and the like and just have income all tax at 20% from all sourcse, whether capital receipts or income and no child benefit.

Just thourght might try clarify voucher confusion.

Back in 2011 could have been april co-alition changed the rates you could save with vouchers was less than we got in 2006 for 1st child.

My guess is if old old contract ie been in same place years then maybe that stayed same.

Like I say hubby,s always done it through his job which helped me when I was working and at home.

Also different employers use different voucher providers current one is computer share and elctronic back in 2006 was paper and not sure which provider.

So if terminate one scheme and join new employer then you have to join under new terms and conditions I guess therefore getting less.

Also not every employer offers it and always seem wrong self employed people cant benefit unless they can make childcare part of annual tax return that be good a rebate on childcare costs.

Me and husband discussed earlier as we both been employers and only management or supervisors say took advantage of the scheme no one else asked of course was advertised in company handbook. One single parent cashier 16hours said majority of her childcare was paid through working tax credit childcare element no sure if this still exists as never was eligible when working for help with childcare other than vouchers and free 15hours term after 3rd birthday.

I really hope not axed at age 5 as its really going to hurt many business, childminders and after school clubs. some schools axed after school clubs as not enough parenst working to warrent it.
Even use vouchers in nursery class of prep up until age 5.

Most people only get 6weeks holiday and school only runs for 32weeks of year so how do we provide childcare for 14weeks if no family near by.

Uses 2diffrent nurserys both private one for each child and they converted houses and wouldent space for loads of kids and become battery farmed childcare!

The childcare for disadvantage d 2year olds red herring its sole purpose is not childcare its child development.
Watched on daily politics last nite as missed lunchtime and both woman conservative and lub dem bloke men were self congratulating themselves why wouldent the middle mind the redistribution of wealth and giving their childcare breaks to family on less income than themselves. This offended me personally we stuggle on most months we not rich.

There are some countries where they do what Xenia's suggested...

So if someone earns £50K, and has to pay for childcare of £10k/per year, the way they'd be taxed would be first X amount free (something like £8000 now?), followed by the £10k that you pay for childcare, and therefore you are only liable for tax of 50-8-10=£32K. This would mean that on 22% tax (because you fall in the lower tax band), you'll pay £7K in tax per year, which is much better than the current system where you would have to pay tax on £50-8-(243*12)=£39K.

They even allow tax rebates on having more children (in a bid to increase birth rates), and other sorts of tax rebates.

And yes, they need to stop the sexist language and stance...!!!!!!!!!!

I agree that they have been testing the waters with the rumours.

Enough of their core voters have expressed horror, bafflement and/or derision for a total rethink to be in order.

It doesn't count as a u-turn if you never officially announced it in the first place...

Yes, they are Vivienne and as Xenia points out, dropping the sexist language and stance would be a very, very good start Coalition Government imho.

I wouldn't get your hopes up think it was only £150 a year.

Highly silly,unfair and a complete waste of money IMHO.

Basically 2x 40k will now get CB,help with cc and a married couple allowance.Those of us on one income of 50-60k who have happily been living together for years get nothing.

Fair- I think not.

I read somewhere today that married couples would be getting a tax break. All these rumours do seem a bit odd to say the least and no announcement yesterday. It does look as if they are testing the water.

Local costs woudl be better but there is very little money in state coffers so I am not holiding my breath. Cost of a full time daily nanny if you have a proper full time job and she looks ater 2 or 3 under 5s which is very common is going to be about £25k - £30k a year including paying her natinoal insurance, her tax and emplo0yers' NI on her salary. You pay that out of your taxed income.

So if you could set the £30k (some hope) off against 40% tax then £12k is from the state and £18,000 paid by you or £9,000 per parents (childcare costs are never just costs for women - men find and pay for childcare and are a full part of this issue in most equal households - real women don't marry sexist men who expect women to be in charge of children not in 2013 and not even 30 years ago). I also think this Government is going to have to drop the sexist stance it has put on this as they will annoy even libertarian flat taxes who woudl be in favour of abolition of all credits, child benefits and the like by their suggestion that Nick Clegg and other men are somehow less responsible for children even than their higher earning wives like his - Miriam G. They can woo the female vote if they avoid sexism but even here they are getting that wrong (... calm down dear). Avoiding sexism would not cost them a penny and buy them much credit but they are still getting it wrong.

Or capped according to the local cost of childcare in the same way housing benefit is capped at average rent for the area for the size you need.

There are situations where a couple is worse off if the second earner works due to the extortionate cost of childcare. (Or single parents who cant afford to work). That is simply wrong.

Therefore making childcare payable out of pretax income makes absolute sense. The problem is, only allowing £2k per year to be paid this way makes hardly any difference. It needs to be 100% although I understand the need for a cap it should be more realistic, say 10k per child.

And for those whom it is not a choice because they can't afford not to both work, helping them out as they contribute to the future of our society by having children and both paying income tax

It is my understanding that the working parent would still get a tax break to pay for childcare in the same way, regardless whether or not they had partner at home.

The confusion is perhaps whether 2 earners would get double the tax break (which surely makes sense as they would use more childcare)

As they say at the end of the article, "the main barrier for women returning to work is the cost of childcare... we simply dont get stay at home mothers contacting us saying they want more money for childcare" - no 10 source

It is about making returning to work a viable CHOICE for second earners, no one is forcing you (if you can survive on 1 income)

However I don't think 2k per year tax deductible changes anything vs current childcare vouchers (it is still nowhere near enough)

I've not read this whole thread, and I know that the policy wasn't announced anyway, but I have a question.

I saw on the front of the Telegraph today that this would punish SAHMs because they wouldn't get a tax-break to pay for childcare. I must confess that I didn't read the whole article because I was reading over someone's shoulder on the train and I can't find it online now.

But my question is, how would you give a SAHP a tax-break? My understanding is that a tax-break is on income tax. That's how my childcare vouchers work anyway. So if you're not working, you're not paying income tax. How then - in fact, why then - would you get/need a tax-break?

(BTW I have absolutely no problem with parents claiming their vouchers and using them however they want in the system as it stands at the moment. If one parent works and the other doesn't, then why shouldn't the working parent claim vouchers and use them for childcare to allow the other parent to study, or write a novel, or learn judo or whatever the hell they want? That's not my point, my point is how you give someone a tax break when they're not paying income tax - do you let them pay less VAT?!)