The madness of the £100,000 childcare tax trap

[MidnightPatrol]

An interesting article in the FT today about the impact of the current and new childcare schemes on people earning £100,000, which is often mentioned here.

You can read it here

"From September, a parent in London with two children at nursery who passed £100,000 of earnings would need to earn more than £149,000 to compensate for the loss of childcare support from the state, according to new calculations by the Institute for Fiscal Studies — a pay rise of almost 50 per cent."

Not to be mean but if you’re working really hard for less than minimum wage then you are making a choice to be exploited. I’ve earned very little and I’ve earned a lot and how hard I worked is immaterial to that in a lot of ways. It’s working hard at skills which our society deems worth paying for that makes you money, no one apart from yourself will stop you working your arse off for a pittance. If you love what you do then maybe that’s worth more than being paid a fair wage to you.

Work should pay and wages should help people be self supporting, in work benefits should be for people who need extra things to access work and shouldn’t be means tested - childcare comes under that for me. We should want and encourage high earners to be working lots and paying lots of tax. I want British people to want more for themselves, not being resigned to min wage topped up with housing benefit. I don’t recognise this country anymore.

Are they going to start providing adequate childcare options for severely disabled children whose families have no options currently? Not even for free, just options for the same cost as non disabled children so families with severely disabled kids aren’t completely and utterly screwed? If not then no the current tax system doesn’t work for me

Nothing to do with my post.
Or the thread but sounds like a worthy MN thread or email to your MP

I don’t doubt that you work very hard and that your job is necessary and worthwhile.
This isn’t what the argument should centre around though IMO. It’s not about who works the hardest.

In a capitalist society there will be those paid more. Generally, they will be in high pressured, specialist jobs that they have had to go through education and further training. We are talking about a punitive tax system that means there is no point in earning between £100-£150k when children are nursery age. This makes no sense.
It also impacts women to a far greater degree because high childcare costs (coupled with the cliff edges) means women are leaving the workforce or reducing hours (let’s be honest, it still far more frequently falls to women).

Someone mentioned the legal world. More women enter the profession but FAR fewer make it to partner. This should concern us all.

I don't think this is about hard work. Someone who earns 100k for a job they don't find very difficult is paying in just the same as someone slogging their guts out for it, and it's equally a problem for the tax take if either of them drop their hours.

In Wales is £100k gross for the funded hours so you can’t make charitable donations or put more into pension to stay under.

I work as an NHS consultant I’ve been offered extra hours to lead on some trials which would be great for Wales but this is one of the reasons I’ve said no. I also wouldn’t actually mind helping out with the odd extra clinic or to cover sickness now and then but to do so would cost me so much more than I could earn. I’ve sailed as close to the threshold as I can and if I accidentally go over because of payrise then I’ll be putting in for unpaid parental leave and cancelling clinics I otherwise would have done.

It’s not a vote winner, and there aren’t that many people in Wales on these salaries with 3 and 4 year olds so it’ll never be a priority. It’s definitely having effects in the NHS though. Lots of us turning down work we theoretically would have done if it wasn’t going to cost us quite so much, or cutting down hours.

Understandable. What a real shame for you, the public purse and all the people who your clinics could've helped. Nobody who hasn't got shit for brains could blame you in the slightest, but it's a total mess!

Thank you. Like I said, I want to educate myself on this, so this is really helpful!

And this in a nutshell is a perfect example of how the policy is utterly flawed and economically stupendously stupid. It just doesn’t pay for people who we need to support our health to make it worthwhile. Actually it would cost them a considerable amount of money to do so. Nobody in this salary bracket is a philanthropist who is going to do good works for the benefit of others at a cost to themselves.

This simply isn’t true for a lot of people, especially single parents, living in London and a few other parts of the south east. I appreciate that £100k seems like a lot (and in other parts of the country I agree it’s a very comfortable salary) but in London raising a family it genuinely isn’t. please take into account that if you have two children you may well be spending easily £3-4K on nursery a month, and £3k on a mortgage for an ordinary 2 up 2 down type home.

if anyone is coming to this late for advice (like me) I found this calculator really helpful childcaretaxcalculator.co.uk