Childcare and the tax system - fascinating thread title! - but I'm genuinely interested

I just think say the RP was getting £100 a week from the NRP for the Government to say that £40 a week of that for example must be spent on childcare if the RP is in work would not be a welcome move.

SQ - to answer your question from yesterday, yes I do think the state should contribute towards the cost of childcare and also recognise the cost of being a parent, in general.

I just don't think blanket tax relief for childcare is the right policy - it would give something £12k to a couple earning 80k each and employing a nanny (or more if they could claim for the childcare element of boarding school) and 0 to a single parent working part time and earning 4.5k.

I don't think it is good enough just to put forward one policy option, not look at other options and conclude that if the govt doesn't use your preferred option it must be due to sexism and the fact that men designed the system. I just think that's too simplistic an answer.

So when you ask 'Does anyone really believe that the reason childcare is thought of as a completely different expense to any of the others, is because they have sat down and thought about it carefully and decided that it was?' Well, yes actually I do. If you want to read about it try this briefing:
www.parliament.uk/briefing-papers/SN00019.PDF

It doesn't mean they got the right answer or it can't be changed, but yes I think sitting down and thinking through all the options carefully is the right way to do it.

There are different reasons for a govt to support childcare -

1. Child welfare - for kids with a poor home life who benefit from nursery, breakfast club etc...
2. Child poverty - boosting the earning power of families on low incomes and overcoming the obstacles to getting back to work
3. Supporting single parents who need particular help
4. Efficiency - because highly qualified women are wasting their skills
5. Efficiency - because the govt would make a net saving on benefits, and a net gain in tax
6. 'the economy needs you' - because there is a general shortage of workers
7. to encourage businesses to provide workplace childcare
8. to recognise the value/cost of parenthood

Etc...

First you have to say what the policy objective is, then work out what the right mechanism is not the other way round.

I think WTC is pretty good because it targets the benefit at those who most need it (2+3) Child benefit is good (and I wish it hadnt been frozen) as it gives money to parents who can decide what to spend it on (8)

It doesn't happen because by doing that the Government would be dictating to the Resident Parent what they should be spending the maintainence from the non-Resident Parent on.

Soooooo

If I decide to create a creche at work, shouldn't I be able to claim that as a business expense. Because it's totally at work and the staff in the creche would be providing services to my business for me (and any future staff).

Based on the cleaner cleaning business premises?

SQ - in your cleaner example, I think you are misunderstanding the principle.

If you are self employed and you have a workshop somewhere for your business and you employ a cleaner for an hour a week. That's a business expense, just like if you employ anyone else to provide a service for your business.

If you employ someone else as a cleaner at your house for 4 hours a week that's not a business expense.

If you move your workshop into the spare room at home and you employ the same cleaner for your domestic and your business space, it's the same thing - they are doing work for the business for 1/5 of their time - so that's a business expense.

Ok, so I've been thinking more about this. Can you hear the cogs turning?

If you think about Victorian attitudes to the 'deserving' and 'undeserving poor' and realise that less than 100 years later we have a Welfare State, I think it actually is possible for a government to introduce massively subsidised childcare.

However, this is one of those developments that I think will require a cultural shift to create the drive for a legislative one. That said, we would need to use some legislature to create the framework for that cultural shift.

If childcare was primarily the responsibility of men, you can best your last £ that subsidised childcare would be the norm. So how do we get more men to become actively involved in caring for children? (This doesn't necessarily mean being the primary carer, btw.)

First we need to change paternity/maternity legislation to encourage more men to SAH. Now that's still not easy to do but it's a lot more achievable than trying to push through legislation to create free nurseries for all.

Secondly we need to create a zero tolerance for men who don't pay maintenance.

Thirdly, maintenance should have an additional element, quite separate to the cost of keeping, which should be a contribution towards childcare if the woman works. I would like to see this being offsetable (is there such a word?) if men were taking on more childcare responsibilities, but we would need a very tightly controlled framework for this to ensure that children weren't being looked after by unreliable, feckless and uninterested twats just to get out of paying some money.

Fourthly, well actually I've run out of ideas but I'm sure you can all think of some.

It may take years before these changes have a noticeable effect, but I would hope that eventually they would make the idea that children are the responsibility of BOTH parents completely mainstream. When that happens, we will be much, much nearer being able to introduce free or nearly-free nurseries etc because the demand would cross gender.

Any attempt to bring free childcare or heavily subsidised childcare would be very unpopular and frankly I can't ever see it happening. We have very individualistic attitudes in this country and we see other peoples problems as theres to sort out on their own with many resenting almost any attempt by the Government to help. I think many people would simply say your child so childcare is your responsibility and you should pay for it.
The tax rises needed to fund it would be a major vote loser and I can't see any of the 3 major political parties proposing it in the near future.

In principle it's a good idea in reality I doubt it will ever come to be (at least not in the near future) as it would be a vote loser, people don't really like the idea of higher taxes.

You would have to get rid of the your child your problem mentality. People no longer want anything to do with other peoples children and they certainly don't want to pay for others either. Society needs men to be more involved with children at the same time society will have to reduce the fear of men being around children.

Even women are not all children friendly, I have seen countless posts on MN with people saying they like their children but don't want anything to do with other peoples so this would be a difficult battle.

That's the thing though you can't claim for your cleaner, your gardener as a business expense. The MP thing is a different situation and a bit of a red herring.

I agree it would be completely unfair if you could claim your gardener, cleaner against your taxes but not your childcare, but you can't.

You can claim 1/5 of the cleaner if you have a 5 room house and one room is for business use...it is not because the cleaner allows you to get on with work.

I agree with sunshine, I don't think that free or heavily subsidised childcare will be on the political agenda in the foreseeable future. To fund it we would need to see fairly large tax rises and I don't think that people would accept it and it would be a vote loser at an election.

I don't think there is a sensible solution to subsidising childcare through tax deduction that will benefit lower earners that much. Even if I paid no tax whatsoever on my earnings, I still would be worse off under that system than I currently am getting 55% paid for by WTC.

I think the only way to go with childcare is to make it massively subsidised so it is either free or affordable. It will mean we all have to pay more in taxation for it, but I don't have a problem with that. Sadly, I suspect many people (more men than women) will, which is why no political party will ever have the balls to suggest it.

I have no truck whatsoever with the arguments that it's totally unreasonable or impossible to achieve. Same things were said about free education, the welfare state and the NHS. It only takes political will.

SQ -

making childcare a business expense for tax purposes seems like it ought to be simple and intuitive and fair, and that is what I thought when I started up in self employment too.

...then I asked an accountant friend and she explained to me why it isn't a business expense, and why it would be regressive as a tax policy- taking money from the less well off and giving more to higher earners - and her explanation made sense, so I am trying to explain that to you (...maybe not as well as she did for me).

The principle is that being self employed or being employed shouldn't make a difference for tax purposes in terms of what is a business expense (what the business pays for) and what is a living expense (whatever the employee decides to spend their own money on).

So if care expenses are included as self employment expenses they would also have to be included as employment expenses, which would mean employers paying for childcare costs. Which I don't think is where we want to go?

Is the point that things such as petrol costs etc are deemed necessary for the running of the business. Having a child is not and therefore there is no need for the Government to seek to sunsidise it.

SQ - but loads of people have explained the principle of why childcare falls into the list of unexpensable but crucial things like: lunch, shoes, transport to work etc... and not into the list of workplace expenses such as toner cartridges, phone bill etc....

The things you can expense as a self employed person, are the same as the things that you would pay for if you employed someone else in your business.

If you required them to wear a uniform you would pay for it, it if you required them to wear shoes (any shoes) you wouldn't. Just because you as an employer require them to be at work without their child, or their dog or their elderly grandparent doesn't mean you as an employer would therefore take on the responsiblity of paying for their childcare, their dog care or elder care.

In the same way your business doesn't take on the responsibility of paying for your childcare.