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!

Except they’ve tried to have a cut off for winter fuel payments and they’ve had
to go back on it! There doesn’t have to be a cut off. That’s optional.

@cannynotsay so you get it for free but OP doesn’t? Why don’t you pay a % equivalent to what OP is expected to pay from her pay and see how you feel.

But there aren’t cut offs in many other countries…do you think people in those countries are all stupid?!!

I don't agree with the system. Two parents who earn less than 100k are eligible and save loads on childcare. One parent can earn minimum wage but the other exactly 100k and not eligible, however the two parents on less then 100k each can actually end up bringing home more, but get the free childcare hours. Higher earns are taxed a lot higher and yet paying full childcare too.

You should get different levels of discount based on salary in my opinion.

Countries who have either universal childcare or very heavily subsidised universal childcare have a higher rate of women in employment.

Honestly this is bloody ridiculous, the poor high earners. Just the fact they CAN salary sacrifice tens of thousands of pounds a year shows that they don't need funded childcare etc. Most of the population doesn't have spare money they can just shove into a pension to avoid paying tax. I'm sure not all high rate tax payers are this greedy and self centred but people like OP aren't giving them very good PR.

I’m able to see that having the cut off is actually creating negative incentives which cause people to pay less tax, which given over this threshold will be at a rate from 47-62% of any extra penny earned - is quite significant.

I have at no point argued against the provision of childcare support, merely that it isn’t universal and that the manner in which it is removed creates some very significant incentives to work less / pay less tax - and that doesn’t seem particularly fair either.

Get a job in a supermarket then you will be eligible for the hours, you may even be able to claim some UC.

Your underlying question as to whether it’s fair that the childcare support is removed at £100k, whilst x2 £99,999 incomes are eligible - no. It’s not fair.
It could also be seen as unfair that it’s not offered to all new parents - in some other European countries that’s the case. It’s not a race to the bottom. We should strive for this, it would benefit all of society.

But I think you’ll be hard pressed to find many people agreeing with you. At £160k it’s expected (in the UK) you can afford childcare solutions that meet your needs.

Because it’s also not fair that women who want to work, are on lower incomes, find themselves unable to work because their commuting costs, childcare costs and other generic costs associated with working, drag their income to a level far below that they could obtain on Universal Credit.

It’s not fair that people work on NMW and cannot afford to make ends meet. If you work full time, you should be able to afford to live but it isn’t the reality here in the UK for many.
So whilst it is technically unfair that there’s an imperfect cut off, it sits quite far down the list of things that will be changed in this country. And I can see that it’s coming across a little tone deaf to the audience on MN because the platform is an intersection of income levels, of which you’re definitely in the minority (approx top 2-3%).

Tax free childcare has also been phased out. It’s just these free hours now

Those people wouldn't have benefits to claim without net contributors. Not sure where they think the money comes from...

Things like childcare should be universal IMO and fwiw i didn't exist as it does now when DS was nursery age so this isn't something that affects me personally. The countries with the smallest gender pay gaps have universal childcare that should be something all women support for all women.

I think YABU- the purpose of the scheme is to help people who get back to work after having children should they wish to do so. For many people without the free hours they simply wouldn’t be able to afford to work at all- you are not in that category.

It was never intended as a universal benefit, like many others. The country can’t afford it- it’s a safety net not an entitlement. Have you seen the huge holes in education, NHS, social care? Do you really think the taxpayer should be subsidising your childcare over these demands?

I earn less than half what you do and there are many benefits I simply don’t qualify for- like child benefit. I just accept that this is because I’m lucky enough to be relatively well off and can manage perfectly well without it.

I'm really confused by your arguments to be honest. Everything you say is true and I agree with most, but doesn't remotely apply to you. You don't earn 137k, or a penny less or a penny more, you earn way more than that.

I earn just above 100k, I went part time and put more into my pension to get the free hours x2 children. I would lose out massively otherwise.

But you don't. Your additional income is still way above what you would get with the free hours.

Since when? We don't use it anymore but my account is still there, I checked if the holiday care provider we use is on there recently (they're not and neither is ASC which is why we don't use it)

Also, when my kids were younger there were no free hours until after 3- it was just salary sacrifice. Again I just accept that this is because policies change over time.

OP I dont think this is the right place to complain about your situation. Dont get me wrong I cant live without MN when it comes to parenting questions BUT if you ask about private childbirth or private education or ANYTHING really once you say you are high earner thats it you wont get anything useful. What I dont get its that in central London 100K is really not a high salary anymore...

I still use tax free childcare?

There’s probably not many women earning in that top level, she’s done well but it won’t go down well on here.

I voted YANBU thinking you were on the £100k cusp which i do think is an unfair cliff edge. But on over £160k you are definitely BVU to complain!

This doesn't make sense with the 100k cap though, if it's a safety net the threshold should be lower. If it's universal it should be universal. As it stands 100k cap is arbitrary and adds to the cliff edge, that leads people to either sink money into pensions or go part time at that level. Our tax system has too few gradients and too many sharp edges

No sorry not 1 person here is trying to put down the OP earning that money. Bloody good on her! Im elated that she is earning that kind of money 👏

I am though totally mystified that she is complaining about having to pay childcare on that level of money though.

Tax system isn't fair. Some win, some lose but sorry I cannot understand the complaint on £160k

Before my child I worked and paid tax for 20 years quite a lot, and once I finish working part time and can work full time, my take will pay towards others.

my family all work. And some in high paying roles. It doesn’t bother me. £160k is an incredible wage and I was in the opportunity or position to ever earn that! Maybe one day I will, who knows. I won’t grumble at having to pay my share, because like others before me it’s part of keep society going.

btw while I worked part time I nailed getting a degree and will definitely be earning a lot more in 5 years. So yeah….

Sorry you are right - i thought it’s closed to new applicants

still there but still has the same 100K cutoff threshold

Oh Boo Hoo. Why do you think - when you are earning such a good salary - that you are entitled to free childcare?

Telegraph short of August content?