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!

Alternatively, you could quit your job, work in a job which pays 29k pre tax and stop moaning?

I think you can afford the childcare and shouldn’t be trying to claim it.

She isn't bitching about a nurse getting free childcare hours. Her point is a joint income of 199k a year can earn the free hours, but her single income can't. But they won't be classed as greedy, only the OP is. The system makes no sense.

The scheme used to start when they were 3 but the threshold has been the same since at least 2020 when I first started using it.

This is the only practical and realistic advice without all the unnecessary commentary regarding whether you should be entitled to it or not.

Get an accountant and also would there be a possibility of you being paid into your private limited company rather than as PAYE.

Annoys me, all the moaning about funded ( they're not 'free') hours. My kids are 27 and 22. No tax credits, salary sacrifice, tax free childcare, funded hours when they were little. Couldn't get a thing apart from child benefit. I had to give up work and eventually train as a childminder because we couldn't afford childcare but I needed to work. Husband on minimum wage and I was self employed so on even less. Couldn't claim a thing. Parents are lucky to be able to get the funding these days. I could have pursued my career if we'd had them back then.

Sure, the situation today is better for the majority that a few years ago.

But for those above the threshold… the incentives to find a way to claim the benefit and so pay less tax become greater, the larger the sum they can’t claim becomes.

So at eg £10k of additional income lost, they might not do anything.

At £37k of additional income lost… well, they’re going to be looking very seriously at ways to mitigate that.

The tax system is actively incentivising people like me to… work less. And pay a lot less tax. That doesn’t make a whole lot of sense.

Also in the event you have to pay for nursery and there is no workaround I would look at a nanny option rather than nursery. If you’re going to fork all that out then maybe go for a better quality option for little one especially given she’s only 9 month. Hope it works out as been there and it’s a headache x

~When I read the title of this thread, I thought it was going to be from parents on a low income, who were really struggling to pay for childcare!

You earn £160k - and you think it's unfair that you don't get the free 30 hours any more....

Jeez. 🙄 🤦‍♀️

This is true and I agree it is unfair.
Child benefit has a similar unfair set up. I can't remember the exact threshold for CB but say it's 60k pa.
If 1 person in a household earns over 60k and the other earns 0 you aren't eligible, but if both parents earn 50k (a joint income of 100k) then they are eligible to claim CB.

It is infuriatingly unfair.

Can you point me to the post where I complained about nurses (or for that matter, anyone) having access to childcare support please?

It’s literally the opposite of entitled as she is not entitled to anything!

she pays £58k a year income tax and has nothing to show for it. And that is just income tax - doesn’t include national insurance or council tax. When you pay that much into the system but not able to access any benefits relating to having a child it’s probably a bit annoying

I’m sorry. I can’t take anyone who complains not getting a childcare freebie when they earn way way way over the national average salary, seriously.

They pay more tax. 🤷‍♀️

Oh dear. This is one reason why we have problems. Comprehension difficulties. The OP didn’t ‘bitch about’ nurses receiving free child care. This is getting too tedious. There’s a reason some people don’t earn bigger salaries, sometimes.

I asked the OP why it was not unfair that she couldn't claim UC, but she just ignores that - Obviously its her prerogative, but if you're going to start a conversation that its unfair you don't get a specific means tested benefit, surely you should explain why its fair you don't get the ones ones that are available?

@ChildcareCost Seeing as you're earning so much, and you've been on MN for 3hrs ish complaining about being pretty wealthy, I'd love to know what job you actually do - assuming you're not just a journalist looking for a good story about how poor people are so much better off than you...

Also -

1. You could buy a nanny for that money.
2. Some people can't scrape together enough to feed and clothe their kids, especially when they've outgrown their school uniform or are moving schools.
3. You earn more in one year than a house costs.

Stop complaining.

It’s not a ‘freebie’. It’s like when people say our healthcare is ‘free’. It’s not free because of net contributers like OP paying so much tax!

OP pays a huge amount of tax. I agree it should be a universal benefit, because of the drop of birth rates they should surely be trying to encourage people to have more children. Having affordable childcare for everyone would aid that.

I ignored it because it’s a stupid question, which I don’t see as being relevant to my point.

Childcare support isn’t given to people because they can’t afford to live - households earning up to £198k can claim it, so long as neither individual earns over £100k.

I don’t object to people on very low incomes, they need help, sure. The impact of UC does not impact my personal tax or employment planning.

I object to being excluded from childcare support which is a benefit afforded to 95%+ of parents, while paying astronomical tax rates. This does impact my tax and employment planning.

Yes I agree with you. The system needs to support high earning/high tax paying women just as much when it comes to childcare because otherwise there won’t be many of them left.

I was in exactly the same situation. My DS starts Reception in September so I’ve had the last 4 years dealing with this.

I earned just over 100k after max pension contributions for most of the time meaning I wasn’t eligible.

The system has such a huge cliff edge that needs to be resolved. I appreciate my earning were more than most other parents of nursery age children but I have in effect lost well over 100k of pre- tax earnings during the nursery years compared with someone who earns marginally less than me or in some cases more than me if total household income is considered.

I pay 17 times more income tax than someone earning 25k. Just before starting my first year using nursery I received a 20k bonus and lost the entire amount due to the tax and childcare rules at 100k.

I don’t care what level of salary you are on, nobody could possibly think it reasonable that a hard working parent of a baby should lose her entire bonus due to cliff edge tax rules.

It’s an awful system that encourages those who bankroll everyone else to work less.

If you add up the loss of nursery hours, tax free childcare and child benefit you need to earn nearly 200k extra pre-tax during the their childhood just to stand still. Thats simply outrageous. The benefits should be universal as they are in most other countries. The tax take would increase if they were.

In that case, the scheme is unreasonable too. No wonder this bloody country is bankrupt! Your complete lack of self-awareness and tone deaf posturing though is absolutely galling in the middle of a CoL crisis when many people have actual, real problems, rather than their diamond shoes being too tight!

Oh gosh the poor love having nothing to show for her £100k+ take home pay!