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!

We earnt too much for the 30 hours. You do just have to suck it up. It is for a short time period and you’ll get the 15 hours after 3. You will then be in a great position when your child is primary age unless you go private. You have to see it that you have great earning potential which comes with high costs in the early years but will reap benefits later on. You’ll be putting a good chunk into pension as well which buys you choices.

Now do I think some of the tax thresholds are stupid- yes absolutely. However, I think you’re also making too big a deal over the childcare hours and need to get a bit of perspective. There should be a cut-off somewhere and you’re well over it.

Childcare vouchers are closed to new entrants, and were capped at a pretty low amount.

I'd be so embarrassed to be complaining about this if I was on 160k a year.

lol - I’m a single parent on £80k and feel like I am loaded tbh

😴😴😴

Exactly

I can't imagine earning the amount you do OP and even giving my childcare costs a second thought. What a self centred post.

Ok so those with a income of 19999 and still taking free childcare are just beyond greedy stupid of government to allow this .

Imagine having a salary of over £100k and crying that you don’t get free hours of nursery for an under 3. Some of us earn pittance and/or live in a place where there is no under 3 funding. How do you think people in Scotland manage to fund nursery for their under 3s? They just do it.

Surely a nanny or au pair would be more effective financially. Would it be tax deductible?

Having never had child care, except for what I did for my grandchildren, I don’t know the ins and outs. I can see that a sliding scale cut off could be a fairer system.

How does it just impact on you? Surely it is both parent's responsibility to pay the childcare. It is a shared cost so maybe get your child's father to stump up the extra you are unhappy about.

It isn't your payment alone to make.

@ChildcareCost I agree with you that the system is messed up and you are not being unreasonable. Unfortunately the UK tax system doesn't reward work. At 160k, you contribute a whole lot more to the tax pot to enable subsidies for lower earners as a good portion of your income is taxed at 45%. So you should be able to get something out too for childcare when you need it rather than nothing at all. It's people like you that have made it possible for others too. Higher income earners are leaving to other countries that incentivise wealth building. I fear for the future of this country. It's a shame that most people don't see it that way but majority thinking isn't always right thinking.

Many, many years ago there was no funded childcare, I went part time, so I could have time with my children, but pretty much all the rest of my income went into childcare. I wasn’t a high earner.

I’m really glad there is support now.

I can understand that you as a high tax payer are getting no tangible benefit from that. But them’s the breaks, and you can only pay £60k max into your salary as pension, so you’re above £100k. You could dip a few hours a week, max out your pension contribution and probably do it?

I agree it doesn’t seem like a smart policy and ultimately seems likely to have a negative impact on the careers of women who will choose to go part time to retain the benefit, and will reduce the overall tax revenue from a significant tax bracket. It intended (I think) to help women, but I think it’ll harm them instead, and especially impacts single working mothers of young children.
I would be really interested to see the government’s calculations on this, because surely raising the threshold and getting rid of the cliff edge would result in better outcomes both for tax revenue and women’s workforce participation?

i think it’s pretty unfair to go after the OP for daring to point out an unfair policy even if she has the privilege of doing well in her career. No one seems to go after people who benefit from family help, but that privilege is immense. The ability for grandparents to provide childcare, to step in due to nursery closure or absence, to help out around the house etc, means that some people have the equivalent of 10s of thousands of pounds in extra support. I never see tiny violins coming out for those fortunate folks (though maybe people attack them too and I just haven’t noticed!)

Also the OP has been rather coy about what the child’s father is earning and overall household income.

Omg are you aware of how delusional you’re coming across! You earn £160k! Are you a single parent or something, lots of kids? Pay for thou child care, you do not need free childcare hours!!!!!!!!!! I earn £12k a year and get it, because I’m limited atm. You do not need it. I repeat you do not need it… you’re in the 1% of earner in this bracket, I’m frustrated with your entitlement.

It’s not greed. She already pays 45% tax! She’s not asking ‘tax payers’ to fund she’s asking for some of the tax she already bloody pays to benefit her too!!

The system is flawed. Martin Lewis argues it’s flawed.

I think maybe the eligibility threshold is set too high if anything. It is difficult to feel sorry for someone earning 160K having to pay their own childcare.

I know its not a race to the bottom and all that but when my kids were at nursery there were not tax breaks and funding kicked in when they are 3.5 (I think) DD1 was July baby so only go a term before she went to school. I can't remember the hours either but it wasn't many. I think most of my income went on nursery fees but i knew that would be the situation when I decided to have kids/go back to work.

30 free hours for the majority of kids is brilliant, and surely pretty costly.

I know someone that runs a business and limits earnings to £199K (big pension payments etc) between him and his wife (shareholder, doesn't actually work in the business) to keep below the threshold - it makes me think he is a dick head to be honest.

Agreed but should not expect to have anything free. However, 3 years of £61k in pension could be fantastic as you’ll reap the benefits - and you’d still have a monthly income of £5k after tax!

Except of that £160k she’s paying HUGE amounts of tax already! And probably works bloody hard.

For most single mums it is their payment alone. The small amount of maintenance they get from the DC’s father does not cover half of the childcare fees. My colleagues are paying between £2500 to £3k per month in nursery fees for one child.

@PersephoneSmith she’s actually being forced to pay for everyone else’s childcare, too! Is that fair?

How can you have a job earning 160k yet not understand that there has to be a cutoff? Surely you’re clever? And not seem to understand that society very much needs road sweepers, nurses, teachers and that yes they do need subsidised childcare to be able to work. Someone on over 100k, not so much.

To be honest though, I am surprised it’s 100k. And I agree totally that there should be a household cut off. not per individual.

OP You won’t get any support on mn. The ‘I earn 25p an hour and am grateful for it’ brigade will tell you that you deserve nothing. Not a single penny of the tax that you pay to benefit you. Well the system is flawed and you’re losing out. It’s rubbish. Sorry!

This in spades. ^