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.

Pingu for president , you would have qualified for help for childcare from the NHS bursary.

Now that has been scrapped for new students, I'm not sure what will happen. For student parents.

I didn't know this scheme existed and it should come in handy after DC1 is born this summer. Thanks!

@mindutopia I hadn't looked into it too much yet but I thought you could still get it on maternity leave? Is there a particular reason you can't or is that universal?

Not at all hibble, a couple could still cumulatively be earning too much for tax credits whilst one of them is on under £120 a week. You'd just need one to be a significantly higher earner than the other.

The big problem with this scheme I think is that there seem to be a lot of gaps people can fall through.

I agree that this new system isn't fair. I am a doctoral student (get a small bursary) and my DH works ft. Luckily we are still under the old scheme (where my DH gets vouchers through work) otherwise we wouldn't be eligible even though I've paid tax for 15 years minimum!

@mindutopia, if on mat leave you may still qualify, see the "Time off work" section on childcare-support.tax.service.gov.uk/moreinfopar/1/

I'm expecting my second baby in the next couple of weeks, and I'm planning on switching from childcare vouchers to tax free childcare as soon as I've registered her birth, because the allowance are larger. I want to squirrel away as much as we can in the tax free childcare account. This makes sense for us because we're expecting high costs. DS isn't yet 2, so at one point we'll be paying about £1,375 a month (for 2 kids, 3 days a week, £55 each a day). Yikes. And when my DS does hit 3 there's a good chance I won't be able to find a 30 free hours place for him in my area, and anyway I'd be loathe to take him away from his childminder who he loves and who is planning on taking my (currently unborn) DD too. Although if we save that much money, we might have to just suck it up.

The tax free childcare rules seem okay to me. I think the bonkers thing is just how complicated it all is - getting your head around what's available and which options to take is so tough.

And the extra bonkers thing is how the 30 free hours aren't properly funded. My childminder can't do the 30 free hours because she would get paid a pittance for it relative to what she usually receives, which is average for our area - I guess in other areas it might not be as bad.

Pingu for president , you would have qualified for help for childcare from the NHS bursary

The childcare element of the bursary is only open to those with a VERY low family income. Ours was considered to be tooo much. I applied for everything going.

The 100k limit is technically household income as if one person is earning over 100k you’re not eligible

As a taxpayer I don't want my money going to people who don't need it, ie people who choose not to work or earn £100k. Why should those on minimum wage subsidise someone earning a salary that puts them in the top one or two percent of wage earners?

There are gaps in the scheme.

Example one - it presumes one working parent and one SAHP however "not working" could just as easily mean a student, someone who is not well enough to work, someone caring for a disabled or elderly family member, or someone who does volunteer work (e.g., to build up experience in their chosen field while looking for paid work).

Example two - should be tapered rather than a straight cut off. Someone earning £100,000 a year presumably puts in a lot of hours, probably some element of travel or unsocial hours too (e.g., business functions in the evening). Childcare outside of Monday-Friday 9-5 nearly always carries a premium, personally I charged double my hourly rate for any work outside of my standard hours.

Example three - for everyone saying that someone earning under £120 a week can claim their costs back from Tax Credits, no, they can't. To get the childcare element of Working Tax Credit you must be working a minimum of 16hrs p/wk and even then the most you can claim back is 70% of your costs (up to a maximum limit based on the number of children you have in childcare). Someone working under 16hrs cannot claim any support with childcare which is why, for lots of people who cannot get the additional hours needed, there are many people in low paid jobs who struggle with childcare costs or who have to give up work as the costs outstrip their income.

I'm not childminding at the moment but when I was (and when I return to it) I didn't offer any funded hours because the local authority pays less than my hourly rate so it's not worth my time. There are only two CM in my immediate area who offer funded places, everyone else refuses.

The student loop hole is very annoying, while undergraduate students can generally get help many uni's do not extend it to postgraduate studies.

@mindutopia - I'm on maternity leave and still qualify. Not sure why you wouldn't.

I see the reasoning behind all 3. I work p/t and earn £115 a week. Husband earns significantly more than me but we're not entitled to any childcare other than the 15 hours which means I top up my fees. I could easily have asked for an extra 2 hours to take my earnings over the threshold and get 30 hours funded but our work/life balance is good now.

If you're a sahm for a purpose then you're the childcare. Want/need a break then find funds to pay it or wait for 15 hours funding. You can't have it all.

High earners, that threshold is high. If childcare was a financial issue on that wage then I'd be looking at why. Hard to sympathise there.

I think the first two are quite sensible and fair. Not sure on the third one. But I agree that you can't claim a tax rebate unless you've actually paid tax.