Loss of 30 free hours will cost me £37,000 of pre-tax income

[ChildcareCost]

9 month olds are eligible for 30 free hours from September. If you earn over the threshold, you do not get this 30 free hours plus the £2,000 of tax-free childcare.

My nursery typically charges £2,150 a month for an under-3. This works out at c. £10 an hour assuming a 50 hour week (open 8-6).

They have circulated the free hours schedule this week, and the monthly cost with 30 free hours is £1,100 hours for an under-3 (noting funded hours only cover 38 weeks).

This means the loss of the 30 free hours will cost me £12,600 a year. Plus of course the loss of tax-free childcare at £2,000.

So, I need to earn an extra £14,600 net just to cover the cost of not being eligible for this scheme.

To earn that £14,600 over £100,000 – I need to earn a gross figure of £137,000.

Surely this is not fair on the parents excluded from the scheme? It doesn't seem proportional that I need to earn an extra £37,000 just to recoup the loss as a result of not being eligible!

I am not saying there is a realistic solution, but clearly 6 weeks maternity leave is ridiculous. I am just saying it’s sad that society has ended up in a place where so many people either don’t or literally can’t prioritise the best care for their child. There are many around me who frankly don’t need to return to work so soon, and many who have no real choice. It doesn’t have to be the mother who stays home of course.

I guess cost of living crisis, housing prices soaring while salaries don’t…it is so much harder now to get by on one salary. Not enough flexibility provided for taking time out, and many people unfairly disadvantaged on returning to the workplace after time out. Sometimes it seems policy makers just shrug their shoulders at these issues and ratchet up the childcare hours and funding. It’s important to tackle it in a more balanced way I think.

You earn this wage and still you want to have tax payers funded hrs .if you want to progress in your male dominated career great
you don't need it you just want something that is designed for the lowest paid in society just pure GREED that's all GREED

Look at it this way - we all pay tax - sometimes we get stuff back and sometimes we don't. I am a fairly high earner (nowhere near as as high as you though) and pay higher rate tax. I have no children however so I am paying for all sorts of people's free childcare - including some who earn more than me.

It's just part of being society.

The point is that she needs them

to me entitlement is to expect something you don’t deserve or haven’t earned so we have a different understanding

I know you’re clearly a troll but I’ll bit anyway. Are you always this patronising?

I couldn’t give a shiny shite if you or the OP think you’re ‘paying my wages’. What a stupidly ignorant thing for you to say.

But it’s not in other countries. For example, my German colleagues are paying about 250 euros per month. Why do you think that it’s acceptable that UK childcare is some of the most expensive in the World?

Well - it isn’t though is it, as the threshold is £100k individual income, and households earning up to £198k can claim it.

Except it's not just for those whose salary would be swallpwed whole, because the threshold is as much as £199,999 for a dual earning, equally split salary household.

It's a poorly designed system - the fact that op earns very well doesn't change the fact that it is a very stupid way to do it.

That applies to everyone though. They chose to have children, they should pay for their nursery fees. No matter what the income, unless it's an early intervention kind of situation.

Ok im a high earner too and not eligible

Honestly? Shut up.

You earn over £160k p.a. working is already worth your while even after the cost of childcare.

Tax is not "fair". It is redistributive. Duh.

It is designed to even out the financial impact to those people whom we need to work and drive our economy, but capitalise does not reward enough for them to pay childcare.

You are incredibly self centred if you can't see this.

Whilst I have limited sympathy for someone earning 160k having to pay for childcare, she's right in that the current tax set-up is bonkers. Once you earn 100k, you start to pay a marginal rate of 62%, take into account the loss of childfree subsidies and it's more like 90%. Most of the higher earners I know are salary sacrificing huge amounts to avoid this cliff-edge, and who can blame them? If the 100k threshold had kept pace with inflation it would be up to 150k and there would be far fewer people trying to avoid going over it.

There’s 2 issues - one is whether or not it is unfair in OP and people in her position, but there is another issue which is the impact this has on society. Even if it is entirely fair to expect those on over £100k to pay full childcare (personally I support a taper on a combined household income), we have to step back from that and look at whether or not this policy helps society.

One example is the shortage of GP appointments when there are many GPs who work reduced hours to avoid going over the threshold. It doesn’t matter if it’s “fair” or not that they pay their way, the fact is it is not good for anyone to have them cut their hours. The Laffer curve is real and we need to engage with that instead of telling high earners to “read the room”.

We don’t want to get into cutting off our noses to spite our face whereby we are so keen to ensure high earners stop moaning and pay their way that we ignore there is an adverse impact to the rest of society of this, and that there might be a net benefit to us all of changing these cliff edge policies.

Are you actually expecting people to sympathise with you?

It’s not designed for the lowest paid in society, individuals earning up to £100k can claim it, so households might earn up to £198k and still be eligible.

I don’t think it’s ‘greed’ to object to what are huge effective tax rates on my income.

Here here! Totally right

That’s a point, aren’t childcare vouchers a thing any more?

we used to be able to salary sacrifice, which reduced your salary to salary-childcare and saved a shit ton of tax, especially for higher rate payers…

so back of the envelope, if nursery costs 30k a year, you earn 160k. Salary sacrifice brings your taxable income down to 130k. 5k into pensions and you’re down a tax bracket and saving all that tax on everything over 125k- which will be over 15k saved in tax?

so in reality you could get a big chunk of that 37k back through such a scheme as a higher earner. A lower bracket tax payer would still be paying the childcare and wouldn’t benefit from the salary sacrifice to such an extent.

but that doesn’t give you so much to whinge about.

As often with these threads, people think it is easy to see who is a net contributor and a net recipient. It’s really not, it’s incredibly complex particularly when state intervention in the maintenance and rise of housing costs are taken into account.

Well you were patronising towards the OP no?

Public services like NHS are only possible because people outside public services pay their taxes.
period
Strange to be so hateful towards people who pay taxes

But it’s not costing you £37k at all, that’s some mental gymnastics.
you are not eligible for funded hours valued at £14,600. The same way you aren’t eligible for child benefit. It’s not a personal cost to you at all and that £37k is useless anyway because you’ve already said you earn well above £100k.

They were replaced by the tax free childcare scheme i believe

No flaming, but in 90%+ of households where it is the other way around, the female partner would be a SAHP.

Interesting.

You’re entirely out of touch with how unfair the rules are. A 2 person household could earn 99k each and still get the benefit. Why should OP have to pay into her pension?

Also, I am a teacher and my husband earns over 100k. It is financially prudent for me to leave teaching… how can this work well for the government?!

No childcare vouchers aren’t a thing any more. It’s been replaced by tax free childcare. The vouchers were available to all taxpayers. Tax free childcare is only available to those who earn less than £100k.

That applies to everyone though. They chose to have children, they should pay for their nursery fees.

Aah but you are not thinking this through

If the government do not subsidise childcare, people simply can't afford to work. Wages would get pushed up as employers had to compete more to fill jobs (as happened increasingly in 2022-2024).
The government want our economy to be competitive, they do not want wages pushed up any more.

Designed to redistribute money from someone earning £100k to someone earning £99k? To the tune of £14,6000 net income? Why?

That doesn’t make any sense.

I’d also argue that no, the function of the state has a remit beyond wealth redistribution - we provide many universal services and there is no particular logic as to why this is excluded.

And of course - the impact of this policy is that incentivises those earning over the threshold to work less, pay into pensions and so reduce their tax bill to claim the support… which doesn’t make a great deal of sense from a productivity or tax raising standpoint.