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.

I wholeheartedly agree.

Funded child care is not the only 'benefit' of paying tax though.

The cut off point is £100k, MOST people getting the funded hours will not be struggling to buy food

The funded hours should be universal. In the same way that school places, GP appointments etc are for everyone.

People that earn over £100k pay the most in tax but are expected to get very little out. Should we strip access to all public funded services?

It penalises wives of high earners getting back to work. My husband earns well over £100k. His CEO isn't remotely interested in part time working. We as a family need to prioritise his career because he out earns me by several multiples, therefore I need to do the pick ups, drop offs, and the judgement of whether it's financially worth it for me to work is made against the cost of childcare against my salary.

78,000 is nothing compared to millions on lower salaries though.

But working doesn't just have a financial aspect. If your family can be funded on his very high salary alone, then you are lucky to be able to choose - become a SAHM for a number of years (hit to career development, pension etc) or keep your career, using the salary from it in the short term to fund the required childcare, with a view to the long term - career development, pension contributions etc.

It's a challenge getting back into work after numerous years off as a SAHM. Your high household family income (without your salary) enables you to choose which of these options works best for you.

Tax free should absolutely be universal, but I think the free hours possibly a little more limited just from a practical view of the impact the free hours already have on the sector.

Wherever you are financially we want more from the government. The Tories are traditionally the party of low tax whilst Labour traditionally tax the “rich”. So I don’t think higher earners like yourself will ever see universal childcare hours. Our childcare bill requires a pre tax salary of over £50k and neither of us earn that. So one of us has to give up our career.

Amen to that!❤️

This particular threshold won't impact many people, but fiscal drag as a whole does does. At many points in the income spectrum. Fiscal drag affects part time NMW earners who go over the personal allowance too, for example. Then there's also the threshold for other things like student loan repayments and child benefit withdrawal. So it does stand to be a substantial issue affecting lots of people, if we don't fix it.

Yes.
Childcare, school meals, bus passes, the government should be facilitating the family structure. Not hindering with arbitrary rules.

Because support should be targetted to those who really need it. I personally don't agree with the 30 hours either, it should be means tested on household income.

Having universal childcare despite the earning threshold would have many advantages. IMO every parent should have access to funded hours for their children. It boosts their development in many ways and allows parents to work or study without the pressure of having to fund it themselves, regardless of income. It also helps lower the distinction between the who has and who has nots! Our society is royally in the gutter and with limitations on future generations like the above, the cycle continues.

This particular threshold won't impact many people, but fiscal drag as a whole does does.

No one talks about this!!

You are a high earner. If you are struggling to get by on that, that's because of your own lifestyle decisions i.e. large mortgage, car finance, etc. Why should you have a lifestyle like that, and get the same free childcare as someone who has to make a decision about whether they can afford to feed themselves AND their child this week?

I don’t understand this logic. Are low earners responsible for their life choices too?

Yes it absolutely should.

We are all responsible for some/many/most of our life choices, however some have less choice (privilege) to begin with, due our (starting) circumstance.

Those 78,000 are paying all the taxes that are funding everything the lower earners receive. If the system starts to encourage those higher earners to earn less then the lower earners are in huge trouble.

How do you fund it for lower earners if the higher earners decide not to work or to work less?

I once received a 20k bonus yet due to the tax threshold and funded nursery hours rules I didn’t retain a single penny of it.

The system needs to encourage higher earners to continue to try and maximise their income otherwise there won’t be sufficient tax receipts fund the lower earners.

The government knows the amount they provide nurseries with is not enough. So nurseries charge top ups. If the government gave everyone free childcare, nurseries would charge much higher top ups. So people on less than £100,000 would need to give up work, even with the 'free' hours, like they have been doing.

As PPs have said if you earn close to £100,000 you can contribute more into your pension.

The government could solve this by charging higher taxes to people who earn over £100,000 and pay nurseries properly, but I'm sure people who earn over £100,00 would prefer to just pay for the nursery years.

We are all responsible for some/many/most of our life choices, however some have less choice (privilege) to begin with, due our (starting) circumstance

Of course some people have privilege, but my point is if you going to question the life choices of someone earning 6 figs by my logic you can also question the life choices of someone earning less…

we have other universal benefits.

I do think there should a limit somewhere. But how are the people who say £100k is enough to pay your own childcare justifying that there are others with higher household incomes getting the subsidy.

At the extreme level...

Single parent with twins, earning £102k vs two parents earning 95k each, with one child?

@Hackoffcough how much tax do you think someone earning 100k should pay?