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.

You are right. I should have written 'viable' instead of 'worthwhile'. In many cases, it is just not viable for the primary care giver to work, even with a partner's salary over £100k. If they were eligible for the 30 free hours, this would make a significant different to their financial independence.

Completely agree. The principle is identical, and I think people focusing on their moral takes on either is completely pointless. Nothing ever gets done about the system flaws because it's far too easy to present it as greedy rich or undeserving poor. People respond to incentives, is what it comes down to.

So basically happy to exploit the system just like benefit frauds at the other end claiming and working.

Only one of those is fraudulent.

Yes, it is a bit daft to start bringing criminal behaviour into it. That's something else again.

@jannier I see you loathe High earners. Why is that?
Looking at how much free time you have, may be you can go back and work so you can pay taxes to subsidise the high earners childcare.

Haven't read the whole thread but I can imagine lots of the responses.

I agree though OP, people have calculated it and there's a sharp cliff edge after 100k where you're actually worse off until you reach I think it's 120k-ish.

YANBU. Britain is a fabulous place to be either very rich or very poor but if you’re
median income you’re expected to pay for everyone else while receiving fuck all from the system yourself.

If someone who is a net contributor decides to take steps to contribute less but still remains a net contributor that cannot be in anyway considered the same as some who is a net recipient refusing to do something that would make them less of a burden on other taxpayers.

Anyone earning the median UK income is not a net contributor. They are subsidised by higher earners.

If that's what makes you feel better ....somebody tweaking the system to give their kids heating and food to me beats someone getting a second or third holiday or feathering the retirement nest.

That’s such a ridiculous and ill informed response that it’s pointless conversing with you any further.

How about everyone decides that it is not worth putting in the time and investment to study and train for the jobs that make you a high earner in your eyes. Then see how much better the country is without any of those jobs being filled, feeding your children and heating your houses will become a lot harder.

Not if they’re a child free healthy adult. Those people take virtually nothing out.

I think that you need to look at over the course of your life and not in one specific year.

When the minimum wage and benefits get increased though so does everything else and obviously you will be less affected than low earners. You also know that childcare years are short and you will have a significant amount of your £100k plus salary free again in a few years unless you are planning on private school. Those on minimum wage will continue to struggle.

Nope. Both of my children have disabilities so have to have nannies before and after school and in school holidays so that I can work. They cannot use group childcare. My childcare bill therefore remains just as high as when they were pre-schoolers. Of course, if I was receiving universal credit, 85% of my childcare bill would be paid by other taxpayers.

I completely agree. The independent economic research commissioned by the Chancellor into why UK productivity is so low (worrying that he'd even need to do so, but anyway...) concluded this is an issue at all of those levels: the system makes it not worth working full time. Yet he has ignored its findings. One can only hope he addresses this in the budget. What he needs to do is:

1. Significantly lower the universal credit taper rate, from 55% to perhaps 35-40%
2. Scrap the withdrawal of child benefit, making it universal again
3. Scrap the withdrawal of the personal allowance, making it universal again
4. Scrap the withdrawal of nursery funding/ tax free childcare, making it universal
5. Set up a proper commission to reform the entire UK tax system and allocate tax free allowances and tax thresholds on a household unit basis like most developed countries. If couples wish to they can split their allowances in half and keep separate finances rather than transfer between them: it would be opt in to share. But this would mean single people/ parents are no longer penalised as they are now.

It's not rocket science. The first four can be enacted immediately, are not complex to change in law and all the evidence shows would create an increase in UK productivity and tax revenues within months.

The latter is not beyond the wit of humanity given that - as I said - pretty much every other developed country operates their tax system on this basis and we have systems in place already to do this because benefits are allocated on a household not individual basis.

Official figures state that if you don’t have average earnings of around 45k per annum throughout your working life your taxes paid don’t cover the benefits and services the average person receives.

This includes not just cash benefits such as universal credit, child benefit, funded nursery etc but also general societal services such as NHS.

Only about 20% of people are net contributors at any one time.

Not if they’re a child free healthy adult. Those people take virtually nothing out.

They didn't go to school then? Have never and will never use the NHS? Never travelled on public transport? Never walked on a pavement or driven on a road? Never used a public library or leisure centre? Won't claim a state pension? Don't benefit from living in a society with a criminal justice system and laws, and the existence of the police and fire service and ambulances if they become unwell? Don't benefit from product safety standards so they can buy food and other goods that won't kill them? Or medicines that work? Don't benefit from a country that is safe and defended (to some extent 🤣) from being attacked? Have never claimed any benefits for housing costs or unemployment? Don't have their refuse collected from their homes?

There's a Monty Python film you should watch.

@BIossomtoes

Why do you insist on making comments like thay when you have no idea of the numbers?

Your biases are amazing to observe

Wow, that's amazing. You were born as a fully grown woman, never went to school or needed childhood immunisations, have lived off grid in a house you built yourself without making use of national safety standards, have never engaged with the financial system the Government regulates and had a bank account or used cash, and live on foraged food! And while doing this you've also discovered the secret to immortality and eternal health so you'll never get old or sick! You are quite some woman, for sure.

@Charlie2121

That number has also been getting progressively smaller over the last 30 years or so.

40% where net tax recipients back in 1990

That figure is now 54% in 2023

To say that trend is "completely unsustainable" when the demographics will get even worse over the next 20 years (so less people paying in and more taking out) is the understatement of the year award.

Only way this works (without a revolution) is a slow reduction in living standards while that 54% number reduces back down to less than 45%.

Won't be pretty for the population which is why improving productivity is so important. The more this is improved, the easier the reduction will be.

Just one page ago you said:

Higher earners pay for their share many times over and subsidise everyone else as they do with the state pension, education, health etc but the fact they also get the benefit of it means they don't tend to object to that. If you make them pay for it for everyone else but tell them they can't use it themselves, that is the quickest way to undermine the service/ benefit completely.

I'd pass on your advice above to those high earners, that should stop them from feeling hard done by.

Some interesting responses on this thread!

It sounds like the most palatable option to make a change here, would be to introduce a staggered removal of the costs over a greater sum of income vs the cliff edge.

That would certainly be an improvement.

Palatable for whom?