To think "Tax Free" childcare is unfair?

[hopingandprayingthistime]

I am surprised to discover that the government’s tax-free childcare scheme isn’t accessible to many types of families, such as:

• families where one partner works and the other doesn’t
• families where one partner earns over £100,000 maximum earnings limit (regardless of what the other partner earns)
• families where one partner earns less than £120 per week minimum earnings limit

AIBU to think this is unfair and will have unintended consequences?

The Childcare Vouchers scheme closes to new applicants this year (was March, now October), so is not an option if you don’t already have a child.

I can understand the second one. And maybe the first (perhaps with an exception if eg the other parent is disabled?) But the third is absurd. So yanbu

That’s because for the first one why do you need childcare if you have a partner at home and three year olds get free 15 hours anyway
For the second one if your a high earned why do you need tax relief
And the third one Is because you would get 2 year old funding at that level so 15 hours free.

Also 30 hours of funding for families were both parents work over 16 hours has a provision is one of the parents Is disabled and can’t work they are still elidgible is one parent works 16 hours or over.

Let’s also not forget the tax credit element for low earners where they can claiming back the amount they pay in childcare dependant on income

Your third policy example makes the least obvious sense but other posters have already explained why this is in place. High earners and families with a sahm parent shouldn't need this anyway (with some exceptions).

Well if one parent is a sahp then they wouldn’t need it as that is what a sahp is and they would get 15 hours of nursery when child turns 3.

2nd I don’t know why people would need childcare help if they earn over 100,000 a year. Especially if the other person is also working.

Third on that wage the person would be getting benefits also so again would not need it as people on lower incomes get help with childcare from tax credits etc so some would already be paid for if not most of it

So no I don’t think it’s unfair at all

The third one is because it’s below the threshold for paying income tax so you can’t get ‘tax free’ if you’re not paying tax in the first place.

But for the second example, surely this exclusion should be based on household income? Otherwise family A with one person earning £100,001 and the other earning, say, £20,000 would be excluded, but another family B where both partners earn £99,999 (with a much higher household income than family A) would be entitled to full support under the scheme.

But for the second example, surely this exclusion should be based on household income? Otherwise family A with one person earning £100,001 and the other earning, say, £20,000 would be excluded, but another family B where both partners earn £99,999 (with a much higher household income than family A) would be entitled to full support under the scheme.

can see the reason behind all 3 as someone said if 1 parent at home presumed you don't need child care .The second one they presume you can afford it (think thats unfair you pay in most and get the least out ,jobs in that pay scale will be very demanding and you shouldn't be punished for being successful .I earn nowhere near 100k and doubt i ever will).The third one to stop people working 1 or 2 hours a week then claiming tax back when really you are a stay at home parent .

Third one is, because - given NMW - anything under that is less than 16p/w work.

16h p/w

No family on £119k needs the support.

If you earn less than £120 per week you shouldn't be paying tax anyway should you?

That all seems perfectly fair to me. We used to get tax free childcare (we did the trial last year so had that and 30 hours well before most), but now I’m on mat leave so we don’t qualify anymore. I still send my older one to holiday club on occasion because she asks to go with her friends, but that’s my choice. I’m not working so I could just keep her home. I’m happy to pay full price because I don’t ‘need’ childcare at the moment. I will when I’m back to work next year so will be grateful for it then.

1. Is because the government assumes, as all the replies here have, that a parent can only be working or a SAHP. Many, many student parents have been totally screwed over by this.

1. Is the same old assumption that high earners don't deserve/need any tax relief or help. There may be some truth in that but the assumption can also create resentment. It also makes life very difficult for any SAHP or lower earner in a financially abusive relationship with a high earning partner. As, statistically, that's most likely to be a woman as the SAHM women's rights and protections continue to be chipped away at (child benefit is another example)

1. This one assumes the same as the first, really. It makes it very hard for a parent to return to work or increase hours if money is tight. It's a nightmare for those on low wages and zero hours contracts. And also for students. Theoretically low earners have tax credits but that's not true if only one of the parents is a low earner. If the other is only just above the tax credit threshold, it's not great.

YANBU

£120 per week is just over £6k a year and personal allowance is 11k. You can't claim tax back if you haven't paid it in the first place.
Agree with pp on don't need it if 1 person not working & understand the household income argument (same with child benefit) but virtually impossible to police I would have thought & HMRC systems aren't amazing in the first place.

The issue with the second one is that it can often mean a low earning mother (or father) it's not worth them going back to work after costs of childcare, so they don't and they lose their careers as a result.

I think it is a bit more fair enough if both earn £100k+ but this rule means a hell of a lot of people in my social circle don't go back to work when really they should. It's short sightedness on the government's part.

I actually think it should be on pre tax income whatever your earnings as anyone needs it to go back to the work. I also think private school should be as well as you're saving the government so much money by taking them out the state system. But no government will ever bring in a (fairer) system that looks like its subsidising richer people.

I agree with give - this means that lots of women won't see it as worth going back to work (let alone if the father is financially abusive) - I think it needs to be on individuals salaries, not on the couple's salary (a bit more like child benefit)

I guess the minimum earnings limit doesn't make a difference given if you're earning that, you're below the tax threshold anyway, so no tax to claim back.

Individuals earning 100k or above are typically in high flying or self employed jobs and will often reduce their tax liability by salary sacrifice to pensions / ISAs etc. Can you really not understand why the government would not want them to use care vouchers to slip their liability even further?

Agree it’s weird for the reasons others have said.

For no 2 - it should be based on HH income not individual again to avoid penalising a lower paid partner. It should also be tapered rather than yes/no.

The £100k limit isn’t really £100k as it is post pension. Anyone earning over the threshold can salary sacrifice into their pension (and they are incentivised to do so by the loss of personal allowance).

No 1 discriminates against student parents. Especially those training in really intense degree courses like midwifery/nursing/allied health professions where you essentially work full time for no money. I'm a fairly recently qualified midwife. The only way we coped with the childcare costs were by paying with Childcare Vouchers that we'd stashed away for ages. We'd have been screwed under the Tax Free Childcare scheme.

But for the second example, surely this exclusion should be based on household income? Otherwise family A with one person earning £100,001 and the other earning, say, £20,000 would be excluded, but another family B where both partners earn £99,999 (with a much higher household income than family A) would be entitled to full support under the scheme.

Means testing is too costly according to the government, that's why child benefit is much the same and 2 high earners just under threshold can claim but one low and higher over can't.

The reasons make sense, childcare isnt needed or is already provided free.

It makes sense as in the first 2 cases financial help with childcare isn't required, and in the third case child tax credits would pay for childcare/free hours would find the childcare requirements.

PinguForPresident were you not entitled to anything through uni? It does seem wrong that full time education is excluded. I can see how it could be open to abuse though if they blanketed students being excempt though as im sure some unscrupulous would sign up to cheap education and not attend. Uni should be excempt for sure as no one pays that amount not to turn up.