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.

The government's tax-free childcare isn't tax-free childcare. It's 20% off your childcare bill being paid by the government up to £2000 a year. £2000 per year is less than 20% of some people's childcare fees due to the different market rates in different parts of the country. Also if you're a higher rate taxpayer you would be significantly better off if it was salary sacrifice prior to tax.

It's not that different to how the 30 hours of free childcare isn't 30 hours of free childcare. It's 30 hours of largely subsidised childcare during school term time only. But I guess that just doesn't have the same sort of ring to it :D. I mentioned this to our childminder and she said she wished more people realised that 30 hours free childcare wasn't actually 30 hours free childcare because she's had to have some very awkward conversations with parents as a result.

I agree with you OP. Childcare costs should be seen as a requirement of having a job. I really wish I was able to pay it as salary sacrifice (so prior to NI, Tax and Student Loans contributions).

Company cars are far from tax free - I know that isn't your main point, but nearly all work benefits are taxed.

But yes, I agree that childcare costs are really prohibitive

I always have mixed feelings about these things.

There is some sense to the idea, I think, if people are both going to work they need good childcare.

Good care for children affects everyone, it's not just about the individual family.

But I think w should be making it easier for families to be live on one income, rather than pushing every adult into paid employment. And every scheme that makes childcare cheaper means that there is more pressure for both parents to work, they can't afford not to.

That's a real two edged sword, great if you are set on working, but shitty if what you want is to have a parent taking care of the children.

I agree SmokedDuck, it’s striking how ‘family’ policies are always about childcare. What if a family wants to look after their children themselves? We need fair taxation to support this, as well as subsidised childcare. Have you come across Mothers At Home Matter? They campaign for this.

Can I pay for my commuting costs or work wardrobe from my gross salary too then please? My doggy daycare costs?
No because these are all inextricably linked to other choices I make, such as where to live, how to commute, what to wear and whether to have a dog.
Childcare costs are no different in my mind.

@ChocOrange1 makes some fantastic points.

@DistrictCommissioner

I agree SmokedDuck, it’s striking how ‘family’ policies are always about childcare. What if a family wants to look after their children themselves? We need fair taxation to support this, as well as subsidised childcare. Have you come across Mothers At Home Matter? They campaign for this.

Not Parents at Home??

I agree, because most of the time the onus is on the woman to assume all responsibility for staying home.

I'm about to have no 2 and won't break even after nursery costs, it'd be cheaper to give up work as I earn much less than my husband. If my husband was a Neanderthal, I might be pressured to stay at home for a few years, thus missing out on further progression. This is how women get left behind in the workplace. As it is we are happy to operate 'at a loss' so I might progress after already missing so much due to maternity.

We don't get the 20pc top up. And I agree, we don't need taxpayers to pay for our kids, we are very comfortable, but a woman on under 30k with a higher earning husband is more likely to give up work, independence and then risk struggling to battle back into the workplace. That's what needs to be addressed. It's fine if that's what you want, but not if that's seen as the only choice.

@Geraldinethegiraffe

I think your friend needs to reconsider her work life balance and/or childcare situation. What about the child's father? They are usually the person who shares childcare. Live in nannies are the solution for many in jobs that involve travel, not cheap but cheaper than the amounts currently being paid. She obviously knew her employment situation before choosing to be a parent? I feel sorry for the child

But I think to answer your question, why can't childcare costs come out of pre-tax income? But in the UK, they do. That's exactly where they come from.

Some of the other points you raise may be valid, but they aren't about childcare costs coming from pre-tax income.

Personally, I've found it makes a massive difference to our childcare costs, particularly now with 30 hours funding. Our nursery bill without any help would be about £800 a month (that's 4 full days including meals/snacks). With tax free childcare, it's £650 ish. And with funded hours on top, it's about £150 per month. That's great. That's a massive help.

But the thing is that people have to be sensible and also make tough choices. I work in London. Dh and I couldn't afford to live in London and pay for the cost of living (including childcare) there. So we live in a cheaper part of the UK that allows us a better quality of life and lower cost of living generally. I commute in as needed to my office. We looked into childcare costs before we had children and we spaced our children so we only ever had one requiring childcare at a time. We also work staggered hours so we don't need any breakfast/after school club. This means our childcare costs are kept within our means. That isn't always possible for everyone and I acknowledge that sometimes children come at times when we might not have planned them. But someone who is spending £4K a month on childcare hasn't done the sort of forward planning that they should have done when they decided to have children or been willing to make some of the sacrifices that might be necessary to make having them more affordable.

Company cars and plane travel tax free? I’m afraid that’s sheer fiction!

Having children is a personal choice. I do agree the burden of early years caring responsibility is put too much on women though.

Also - The taxpayer already does fund childcare - free schooling?!

The problem is that tax free childcare only kicks in once you're in work so excludes volunteering to get back into work after time off... Waiting until the children are 3 for free hours is a long time out of work!

Also families might be able to sustain just about breaking even on cashflow but might well struggle with a negative which is fairly likely if there's a commute as well!

The tax free childcare system is an absolute pain in the arse. So MUCH easier to have childcare costs covered pre tax.

My work place did a childcare scheme where they took childcare costs out of wages pre tax. It stopped when the gov introduced the 20% childcare top up, which actually is effectively the same for anyone I know who used both schemes.

If I was bringing in 100k I’d be living my best life. If I was bringing in 100k and not breaking even with childcare then I’d stay at home.

I don’t expect the government to pay for my life choices. If I couldn’t afford a kid and all the associated childcare costs I wouldn’t have had one. It’s quite simple really.

@paralysedbyinertia

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

can my travel costs come out before tax too? (obviously when not working from home)

We can't claim the tax free childcare as I don't earn the equivalent of 16 hours pay at minimum wage. In a couple, you BOTH have to be working and earning £140ish PW each. Pisses me off. I only work 10 hours so can't claim.

As others have said it'd be capped at £500 between us anyway.

I posted a while ago that I couldn't do the job I dreamed of because I'd barely be earning anything after childcare. Even with the 20% it wasn't worth it. Not everyone is earning huge amounts.
And unlikely to get a pay increase or move up. Instead I'm stuck in a job I hate because we need the money and it's the only way we can afford childcare too.
Absolutely sickening.

[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]
so you want the government to pay for childcare for those earning over £100k?

I totally agree with you and also for high earners. So many women end up leaving so called high earning professions as the personal sacrifices aren't worth it for the professional requirements. It won't change though as it's a nice way of keeping women in their place.

@FakeFruitShoot

We can't claim the tax free childcare as I don't earn the equivalent of 16 hours pay at minimum wage. In a couple, you BOTH have to be working and earning £140ish PW each. Pisses me off. I only work 10 hours so can't claim.

As others have said it'd be capped at £500 between us anyway.

If you only work 10 hours, how much help do you need for childcare?

so you want the government to pay for childcare for those earning over £100k?
Why don't you feel an outrage that the same people can contribute to their pensions pre-tax? (effectively, saving 40%)
At least the childcare costs are benefitting the society as a whole.

This is what my workplace do for the nursery onsite. They take the fees out of your salary pre-tax. It does make a big difference, but still bloody expensive.

@Abouttimemum

My work place did a childcare scheme where they took childcare costs out of wages pre tax. It stopped when the gov introduced the 20% childcare top up, which actually is effectively the same for anyone I know who used both schemes.

If I was bringing in 100k I’d be living my best life. If I was bringing in 100k and not breaking even with childcare then I’d stay at home.

I don’t expect the government to pay for my life choices. If I couldn’t afford a kid and all the associated childcare costs I wouldn’t have had one. It’s quite simple really.

Every society is concerned about the next generation, it's really not just about personal choice. We are almost all going to be dependent on them eventually, both paying into the system and directly taking care of us.

@forinborin

so you want the government to pay for childcare for those earning over £100k? Why don't you feel an outrage that the same people can contribute to their pensions pre-tax? (effectively, saving 40%) At least the childcare costs are benefitting the society as a whole.

How do you know I don't feel outrage at this? I don't recall commenting on pensions either way.

@PacifyLulu only if you haven't noticed that the birth rate in the UK has been below replacement level for decades.

But then again you clearly don't want a state pension plus essential and non-essential services when you are older....