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 subsidising them, and paying for myself. I pay a lot of tax. That’s fine, that’s how the tax system works.

What I am querying is then being excluded from being access the childcare scheme myself. Earning an extra £37,000 is quite significant just to cover the loss of the free hours - and being incentivised to work part-time to claim it doesn’t seem quite right.

You earn over £160k?

Kindly, suck it up and pay for your own childcare.

And I say that as a high earner who gets no handouts or help. But I’m earning a lot less than £160k.

But you haven't "lost" it. Previously you'd benefited from support, which you now don't need.

Anyone on any benefit "loses" it when they get themselves in a position where they don't need it.

Okay I’ve just seen you earn 160k - OP, this probably wasn’t the place to post this 😬

I earn over £160,000 so can’t salary sacrifice to get under the threshold. I could go part time and salary sacrifice to get there - but as a woman in a male dominated industry where I want to progress, that’s not optimal.

£160,000 AND you want the government to pay for your childcare - wow - entitled much!!!

This has to be rage bait (as the younguns say)

This really makes my blood boil, boo hoo you earn over 100k a year and want hand outs. Not like you can’t afford it.

But if I earn a penny under £137,000, I am actually losing money with one baby in childcare vs earning £99k.

So you have to put everything in your pension and cap your income at £100k - or I suppose go part time to get it there.

That doesn’t make any sense - why at at £99.9k can you claim such a huge sum in childcare, and the you have net loss on any income beyond that up to £137k?

The issue with this is you don’t seem to understand that not everything is for everyone, you do not need it, so are not eligible for it.

If paying tax meant automatic entitlement to everything then we’d all be claiming UC, free hours etc.

You don’t pay in to take out.

@ChildcareCost I earn over £160,000

Gosh, life must be hard

That's how thresholds work? Like the higher rate of tax. There has to be some sort of cut-off. I think you're getting bogged down in how theoretically unfair this is rather than the fact that you are more than able to afford childcare.

I just think I should be eligible for the childcare scheme that 95% of other parents can access, yes.

The loss of childcare being worth £37,000 of pre-tax earnings is very significant and is likely to change people’s behaviour around work - pensions, hours worked, promotions gone for etc.

Say I earn £165,000, including the loss of childcare hours my effective tax + loss of benefits rate would be 80% on every penny above £100k. Thats quite significant.

Welcome to Labour. Same principle of taxing children’s education. Politics of envy. They don’t like people that they perceive are ‘doing well’ that have achieved. They certainly wouldn’t miss an opportunity to scam even more cash from such people.

And as you can see from some replies on this thread, many people like their approach. Fair or not.

@Backforawhile

"but it wasn’t always like this, and I worked hard to get where I am in my career."

Many, many people spend their whole career on minimum wage or just above. It doesn't mean they haven't worked hard.

I agree OP. We want high earners to stay high earning we want women in the workforce at senior levels, we dont want people putting it all in pensions, we want some of it spent.

I cant see childcare is any different than state education in terms of public good.

There are a lot of people that could afford the 6k a year a state school gets per chikd but noone cares. In fact people get pretty cross if you pay privately.

Short, practical advice would be to put more money into your pension.

However, I don't think yabu. Publicly funded provision should be universal. The idea behind social democracy is that a progressive taxation system sees those with the broadest shoulders contribute the most to the communal pot that pays for public services. We are eroding support for social democracy by allowing these policies to continue.

Given the multitude of problems facing the country at the moment though, almost least the fact some children are growing up in destitution, I can't imagine changing this being very high on the 'things we need to find money for' list anytime soon I'm afraid to say.

95% of other parents can access

who earn less than you?

Edit - amazing with your huge salary you cannot see this

Seriously, £100k is not megabucks, particularly if the parent is a single parent, pays a lot in childcare or lives in London /
other expensive area.

why should she pay a shit load in tax to allow others to get free childcare, but not be entitled to it herself

I'm actually shocked to learn that the cut off is £100k. Disability benefits fuel or childcare for high earners....? 😆

With tax thresholds I pay a different % of my income over the threshold.

With the loss of childcare I lose it as a cliff edge is all of it for earning a penny more, hence the huge impact.

Does there need to be a cut off? I’d query if more tax revenue might not be raised by not incentivising people in my position to put huge sums in their pensions…?

Where do you think the cut off should be op?

You could say if you earn £99,999 you still don't, but you have to draw a line somewhere. But I agree with the OP it shouldn't just be a straight cut off wherever it is, but some sort of taper. And it seems both parents could earn £99,999 each and qualify, which seems pretty unfair to single parents.

I do feel for those who are just over the £100k limit who (unless they salary sacrifice) lose entitlement to free hours…and accordingly are penalized if they get promoted. But at £160k you’re well out of that bracket. Don’t even go there OP (and I’ve been in your bracket).

@Lougle I know - that wasn’t what I was saying. Plenty of people have worked harder than me and earn less. The world isn’t fair and salaries aren’t always representative of effort, or value, or hard work. DH earns far less than me and I would say he works much, much harder than I do. What I was saying is that I worked hard to get where I am, and don’t want to lose that by going part time or taking a career break.

Well at at £160k, less the 30 free hours, I’m still looking at an 80% tax rate on any earnings over £100k… which seems rather high.

Or you could earn £61k less, qualify and pay less tax?