To think that childcare costs should come out of pre tax income?

[Geraldinethegiraffe]

I know many mothers who say that after paying for childcare they pretty much break even.
Some of them end up being SAHMs because of this. Or their partners put pressure on them because they earn less than childcare costs.
So why can’t childcare cost come out of pre tax income as a work enabler? Some other countries do this.

Don't pay for childcare personally, but I agree with you. It's a cost of working, and should be paid before tax.

A way around this is the government's tax free childcare which tops up contributions by 25%

Tax free childcare tops up by 20% so this is in effect the same.

There's tax free child care. Perhaps you should look at what help is available

Ah, ok. I'm not up to date on the current schemes. If it's already tax free, then fair enough!

Do the current schemes have caps? When my DC were in nursery childcare vouchers had a limit of about £250 per month per person (salary sacrifice type scheme so tax free) so a £500 maximum for tax free childcare and only then if both workers companies allowed the scheme. Even then that was a drop in the ocean in terms of cost of childcare so far from tax free.

Honestly the break even thing is a bit of a fallacy. Yes, in pure intake/outtake you don’t gain anything, but people need to look deeper.

Are you contributing to a pension or retirement? +
Are you gaining experience? +
In 12 months (assuming a yearly raise schedule) will you be earning more + (this may be a wash if childcare increases at a similar rate)
Are you gaining seniority +

This doesn’t take into account every circumstance, but the point stands there is more than just base money in and out.

@saltinesandcoffeecups what you say is true, but from a cashflow perspective it rarely helps.
Also, not all people (/women) are in careers with good paths to progress. Not everyone can expect experience to lead to significant increases in income.

Regarding the available tax free childcare, it is both capped and also linked to means. In a city like London for example, it doesn’t come close to covering the cost, particularly for families where parents need to work long hours.

I know many will say that if you earn enough not to qualify, then you should be ok anyway - but that’s actually not the case if you are renting a place in London and have to oay for childcare on top.

And an additinal thought, I think tax free childcare should cover ALL types of childcare - some families may need care at hours where nurseries / childminders don’t operate (if you work late hours or nightshifts for example).

I’ve been thinking about this after reading about the upcoming baby bust and how some countries are trying to incentivise families to have more children.
The policies around maternity leave and childcare in the UK really don’t go far enough and sadly continue to contribute to the inequality between men and women in the workplace

If you have more than one child it also means it is too much of a financial loss to work - in greater london it's c. 100 a day per child near me for under threes and I think you have to have a v low joint income to qualify for free hours. Tax relief is capped to £2k. For two kids that's essentially £1k per week after tax. I agree OP.

The government does pay 20% of all childcare payments for working parents.

@GrumpyHoonMain as others have mentioned the value of this is capped to max 500 a month, and means linked so not available if income exceeds 100k.
For London and similar areas 500/month is a drop in the ocean if you need full time childcare

think tax free childcare should cover ALL types of childcare - some families may need care at hours where nurseries / childminders don’t operate

It does

[quote Geraldinethegiraffe]@GrumpyHoonMain as others have mentioned the value of this is capped to max 500 a month, and means linked so not available if income exceeds 100k.
For London and similar areas 500/month is a drop in the ocean if you need full time childcare[/quote]
Its not the governments responsibility to pay for your kids. If you can't afford to pay for childcare, then one or both of you have to work part time or not work, or you go without other things to live within your means.

You don't have to have children, or have multiple children, or have children close together so that they're in paid childcare at the same time. That is a choice.

Sensible people make a plan before becoming pregnant, to come up with a way to pay for the children they plan to have. The taxpayer already pay child benefit and 20% of childcare costs, plus additional universal credit for those who need it. How much more do you think should be covered by someone else?

@jimmyhill up to 500 every 3 months (www.gov.uk/tax-free-childcare) doesn’t cover all types of childcare. Or maybe it does but just a tiny fraction of the actual cost. So not really a solution,

Also if you earn over 100k and also get £500pm towards childcare, that's about £6k per month. If you can't "get by" on 6k per month then you need to make some changes!

@ChocOrange1 I think the 100k income cap is only applicable to a small minority of families.

For most families on less than 100k the 500/3 months does not go far enough.

If you are on 100k though, and I know several people who are, it always comes with other burdens. Don’t think I know anyone on 100k with a 9-5 job - one mother I know has to travel once a week and even when she is at home often works late. She spends a fortune on nannies and overnight nurses etc. Altogether she spends about 4k a month on childcare, and this is not above market rate (nannies expect and deserve to get at least 10 pounds an hour so for a 50 hour week 500, and that’s before employer’s tax, overnights, etc…)

Presumably your friend knew what her job required, and researched the cost of nannies etc before having a baby? And she and her partner decided to continue working full time after having children nonetheless.
I don't see why the government are responsible for footing the bill for that choice?

@ChocOrange1.
I think it should all be tax free - not paid for by others. There’s a big difference.

Just like people can claim work expenses before paying tax, why should childcare be any different?

This is fundamental to creating an equal society where women and men have equal opportunity.

Not to mention where parents and single people have equal opportunity.

And since chimdren are the taxoayers of the future, a lot of forward looking governments are actually already adopting policies like this.

My friend does break even, but I just gave that example to show that even on a 100k income you could still see the majority of your after tax income spent on childcare, so this affects parents across all income brackets who are not crazy rich.

That said, if you think it’s not important for the economy or our society to have children, then with current policies we’ll end up like South Korea pretty soon (among the world’s lowest birth rates), and the only way to ensure there are enough people to pay taxes in future and look after the elderly will be increasing immigration.

This is fundamental to creating an equal society where women and men have equal opportunity.

Not to mention where parents and single people have equal opportunity.

I don't see why tax free childcare would make any difference to this. The cost would still be huge, even if it was 20% lower a lot of people still would struggle to afford it and work full time.

Surely more important is to challenge the idea that it should be the mother who reduces/gives up work or the fact that women are paid less and therefore are the ones expected to stop working when kids come along.

That said, if you think it’s not important for the economy or our society to have children...
Pretty sure I didn't say that. But I think people have a responsibility to plan ahead financially for when they have kids. Childcare costs shouldn't be a big surprise when you come to going back to work.

@ChocOrange1

Presumably your friend knew what her job required, and researched the cost of nannies etc before having a baby? And she and her partner decided to continue working full time after having children nonetheless. I don't see why the government are responsible for footing the bill for that choice?

The "government" isn't footing bills for people's "choices". If you want to get super cynical, we actually need to repopulate our country in order to create future taxpayers, doctors, etc.

The current cost of living vs average salaries is a problem. The average wage doesn't adequately support a mother of 2 children who is working.

Yes you could cry "so stop at 1 or whatever you can afford" - great. Got you.

However I'm not sure I get a society which is set up to disadvantage working mothers being confirmed as "that's how it is" on Mumsnet - doesn't sit well with me.

@ChocOrange1

This is fundamental to creating an equal society where women and men have equal opportunity.

Not to mention where parents and single people have equal opportunity.

I don't see why tax free childcare would make any difference to this. The cost would still be huge, even if it was 20% lower a lot of people still would struggle to afford it and work full time.

Surely more important is to challenge the idea that it should be the mother who reduces/gives up work or the fact that women are paid less and therefore are the ones expected to stop working when kids come along.

That said, if you think it’s not important for the economy or our society to have children...
Pretty sure I didn't say that. But I think people have a responsibility to plan ahead financially for when they have kids. Childcare costs shouldn't be a big surprise when you come to going back to work.

Yes, it is very important to address the perception that mothers should be the ines to give up work. But you do this by making it easier in practice.

Why should plane tickets and company cars be tax free - when the childcare that enables you to work (whether mother or father) comes out of your net income (other than the 2k per year you can access tax free, which is a drop in the ocean)

The 2k per year is the top up from the government, so the parents can pay £10k of childcare tax free (at basic rate anyway). It’s also per child. It’s better than the old childcare voucher scheme, it’s not perfect but combined with the funded hours it’s a big help.

I think it is a little bit like putting a bandage over a broken limb, to be honest.
Childcare should be centralised and heavily subsidised by the government for everyone. I have old college friends, professional women, who live all over the world now - everyone is horrified at £90/day preschool fees in London, I wasn't even believed at first... and even more horrified when they found out that it is not some posh place which I chose out of self-entitlement, but almost a factory farm when it comes to floor space per child
A friend in one of Scandinavian countries pays around £200/month (and that was considered expensive!), in Germany I think it was also under 300 euro for full time care... our gross income is similar.