Should tax-free childcare and ‘free hours’ be universal?

[Nursery772]

Having attempted to apply for the new 15 free hours for my nearly two year old, I discovered you are not eligible if you earn over £100k.

My four year old also receives only 15 of the 30 free hours for the same reason.

I am not sure if the additional 15 hours from 9 months / 2 years will be income contingent.

Between this and tax-free childcare, I will lose about £12,000 of post tax income in 2024/5 tax year.

This seems very onerous!

Should tax-free childcare and ‘free hours’ not be universal? It is an expense to allow me to work, and I’m paying quite a bit of tax.

Also being applied as a cliff edge is brutal, seems to create an artificial ‘cap’ on the amount parents of preschoolers can earn.

“The answers are obvious then. Give up your high earning job and do one that benefits society, claim the benefits lose the holidays, house and luxury and feel better as you're being treated fairly.”

NAH I think better to go and live in another country if you are skilled where they have a functioning health and education system and you as a family are valued, rather than blamed/envied. Because Governments in other countries know your value and those of your children.

It is these thresholds that have lowered productivity nothing else.

People are so blind. The Tories have taxed the middle earners and bedrock of society through the roof because they want the Uber elite and serfs at the bottom. That is their model.

Even more obvious than doing anything as drastic as career changing or emigrating, is just working a bit less.

Public transport is essential for me to get to work and it’s not tax deductible.

‘Rich’ doesn’t depend on your earnings these days, but your assets. A pensioner on £25k a year in a house they have paid the mortgage off on which has inflated massively and is now worth £800k is far, far richer than a couple renting with 2 kids in nursery in a similar area, one on £101k, one on £40k. Post tax earnings of the couple = £6.5k, nursery takes £3k of that, rent takes £2k, Council tax, bills, food, swimming lessons. Not a lot left.

Yes the earners are possibly wealthier than 2 x people earning £40k, but it’s the people with no housing costs that are actually ‘rich’. We need to start taxing wealth more and income less.

By no stretch of the imagination are those on £100k+ middle earners. The average salary is £35k and those on six figure salaries are in the top 4%. They may not be members of the uber elite but they’re not so far off.

Just one problem with that hypothesis @Tiredandgrumpykids. A house is an illiquid asset, you can’t spend it or pay tax out of it. Of course an £800k house is taxed when you die. Most of those high earners are also living in expensive houses so in your world they’d be taxed on those assets.

@Araminta1003

Its posts like the one you quoted which makes me conclude the UK is in terminal decline when you have over 50% of people dependent on the state.

The lack of education and the profound inability to understand how the country works in a global world leads to mentalities like that one.

Its easy to "vote yourself other peoples money" until you run out of money.

And thats the UK today. It has run out of money.

They seem unable to understand that the UK has lived way beyond its means for the last 20 years and that bill has now come due. The UK is not a "wealthy" country anymore. It has a very small slice of very rich people (who pay some taxes), a small slice of professionals (who pay the bulk of the taxes), and a huge amount of poorer people in the middle (who pay little tax and receive more in benefits).

So what will happen is that they will get a lot poorer in real terms because they have limited options. The wealthier people with options will leave, retire, or work less, further making the lower earners poorer in real terms.

Thats what I see over the next five years or so.

Why are you assuming that a £100k job doesn't benefit society? Or that a lower paying one would? You've got an almighty chip on your shoulder.

@Tiredandgrumpykids

You are correct. Property should be taxed at much highe rates.

Oh, and ignore blossomtoes. She is ageist against young people through and through and provides no real value to these discussions.

So you think property should be taxed at higher rates but only if it belongs to people over working age? And you call me ageist! 😂

A household income of £100K isn't buying a house worth £800k though are they? Not without a couple of decades of equity behind them.

We need a wealth tax as paye tax is disproportionate & housing is a huge issue

https://ifs.org.uk/articles/how-fix-our-irrational-income-tax-system

this podcast explains just how damaging this policy is. Stating even the most crazed Trotskyite will think it’s illogical if they fully understand it.

Of course it can be. Assuming the house worth £800k today was purchased a few years ago. Just like the pensioners’ £800k house wasn’t that price when they bought it. That’s the problem with taxing assets, it’s essentially fairy money.

But if you have an asset you can presumably borrow against it? Or there could be a charge put on it repayable on death. Or someone in an £800k house could downsize if they can’t afford the tax.

It's not "fairy money". Its an asset that can be liquidated. And "a few years ago", where is this house that must have more or less doubled in value in a "few years"?

Why would it need to more or less double? The average house price was £188k in 2014, it’s now £310K. It’s not double but it’s more than 50% growth. In any event the hypothetical £100k under discussion here isn’t household income, it’s individual income.

Is 2014 is not a few years ago

Ok but if 100% of your pay goes on childcare then it doesn’t matter how but your mortgage is you can’t afford it and you too will be making decisions about how to feed your children.

My OH is a higher earner so we don’t qualify for any childcare help. I am a nurse but chose to quit my job as it wasn’t worth the childcare costs and headaches with my shifts. Maybe if we had a bit more help to pay childcare costs I would have continued with nursing that I loved but my income just wasn’t worth it.
I still do a bit of nursing to keep my registration but now I’ve left it I’ll never go back to a permanent role again. And they wonder why they don’t have any nurses!

Essentially yes.

People allow themselves to be distracted by whether they find you personally sympathetic or not, meanwhile we've designed a system that discourages you from using skills that they very much need. It's batshit.

In my view childcare should be tax deductible - regardless of income level. Childcare means you can work and be economically active and is a cost of working. If you earn well you pay lots of tax, not just income tax but other taxes.

If it all goes on childcare costs, you don't contribute to the economy in the same way.

@jannier if it was a household cap of £100k, a couple earning £50k each might be spending 2/3 of their joint income on childcare costs and not be eligible for help.

I tend to agree with this - but then, if we're going to allow expenses related to working to be tax deductible, why not commuting?