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!

You're getting a lot of shit but I do agree with the basic point you make OP, the way the cliff edge for qualifying for childcare works is daft, as are the various tapers for allowances. I basically think benefits like that should be universal, as should things like the personal allowance and pensions annual allowance, but income taxes at all levels, particularly at the top end, should be a little bit higher. It's all well and good people bleating that since you earn a lot 'the taxpayer' shouldn't be paying for your childcare, but that misses the fact that you are 'the taxpayer' to a far greater degree than the people criticising you. It's pretty clear that compared to a lot of people on MN I'm fairly left wing, but even I can see that having an ever diminishing proportion of net contributors paying for the great majority of benefits, when those net contributors are denied those benefits themselves, is a recipe for disaster in the long run.

Ok I haven’t RTFT but….

1. can the child’s father not pay half?
2. you are very rich. Why should I as a tax payer pay for the childcare of someone earning 7 times as much as me.
3. funded childcare didn’t use to be a thing. Some of us got no help on a fraction of your salary.
4. you chose to have kids.

Why can't you?

Do you think those earning minimum wage and on UC as a top up are actually fucking proud of that?
Do they boast about being poor?
Going to a food bank?
Second hand clothes and toys?

The system isn't perfect, but if I earned that salary I wouldn't whinge about paying for private childcare I'd have a f/t nanny

Somebody can't manage their finances - and it isn't me.

People on lower and middle incomes do…the UK is spectacularly bad value for those on higher incomes. We pay shit loads of tax and get very little in return.

The vast majority of people could work every waking hour and not earn that. Equally some of the hardest working people in the country are on minimum wage. There’s something very badly wrong with a society that equates earning a top 0.5% salary with hard work.

Or work less, pay less tax and leave a shortfall in funding for childcare paid to lower earners.

Higher earners already heavily subsidise funded nursery hours for the majority. Why should they not receive the same as everyone else when they are the ones picking up the bulk of the tab?

Keeping the parents in their higher paid roles during nursery years is a massive net beneficiary to the treasury in the long run. Having a tax system that results in effective marginal tax rates of 100% or more most definitely isn’t.

Universal free childcare would cost a lot of money so everyone would need to pay more tax. However, very few people would be willing to pay more income tax and a Government that raises income tax would be extremely unpopular.

Subsidising the cost of childcare for average and low earners will incentivise women returning to work after having a baby. I doubt that high earners like OP need that incentive to remain in the workplace.

I absolutely do think about the bigger picture and I think that the answer is to stagger it below 100k. The early years sector is completely on its knees and children are completely missing out on a good start and someone earning 160k is moaning about their childcare costs! It shouldn't be allowed for people to put that money into their pension and get this free childcare it's created a completely unsustainable nursery sector.

You completely lost me when you said you earned over 160000 pounds.

As a comparison: We have a combined net income of about 80000 pounds.

Half of what you earn on your single income.

We currently have two children in full time nursery, 19 months old and 3 1/2 years.

We get 30 hours for 1 child and 15 hours for the other child at the moment.

We also get the tax free childcare care.

Our nursery bill still comes to 1591.1 pounds each month.

Almost double than our mortgage.

One of the big problems is that the Government funded free hours are not properly funded so nurseries are putting the fees up for non-funded hours. That means that people like the OP are getting screwed over. They don’t get the Government subsidy and then are paying even higher fees to subsidise others.

Keeping the parents in their higher paid roles during nursery years is a massive net beneficiary to the treasury in the long run.

It’s a benefit. I doubt it’s massive.

My wallet is too small for my fifties and my diamond shoes are too tight.

Taxes probably wouldn’t have to go up actually, given that most parents seem to get around it by reducing taxable income. Taxes would actually probably go up. There are academic papers on how increasing the tax burden actually makes the tax take go down because people change behaviour.

So your salary is £160k per annum, yet you feel the tax payers should fund the childcare for your 9 month old, to the tune of £12k per year?

You're in the same boat as most people in all the years before this scheme was introduced. Cough up.

1. who is paying it isn’t really relevant to the point - which is that the new free hours system creates this £37k loss which you need to recoup to break even. It’s based on one salary.
2. I’m not ’very rich’, sadly. I have a good income, but not so much money I can be wasting opportunities to streamline my tax burden and childcare outgoings.
3. It’s a better thing on the whole that there is funded childcare now yes. But I’m not sure why I’d compare myself to a parent 5 years ago, vs a fellow parent today?
4. The ‘you chose to have kids’ argument seems to only come out in reference to higher earners, and would be seen as terribly offensive in any other scenario so…

@ChildcareCost

You take home over £8000 after tax a month.

If you're quibbling over a £2000 nursery cost then I suggest not having children.

Even if you were a single parent you take home over double what most households do.

If you were earning just over the £100k threshold then you would have got some sympathy as sime individuals are genuinely hit hard over this.

But when you mentioned your £160k pay the sympathy is going to be almost zero.

You clearly dont appreciate how privileged you are.

I agree it should be universal.

How come the tories introduced it so long ago but it's only being implemented this year? (Genuine question, I didn't realize it took so long to get policies etc in place)

I'm just going to fetch a microscope to enable me to find the world's tiniest violin.

Errr she IS subsidising them, with the huge amount of tax she pays. We have the highest childcare costs in Europe and we all deserve free childcare, rich or poor or inbetween.

But as has been pointed out on this thread - the high earners are the ones actually paying the tax already, yet not getting the benefits. I can't believe universal childcare would amount to much, given it's already given to ~95% of people. What's the other 5% going to cost?

In my (our really, as a couple) case - I am staying at work, as the high earner. My wife however is taking 3 or 4 years out of working as if she kept working full-time, earning a decent salary (around £50k) we'd be a whole £500 a month better off. There is no point.

Is that what you want? I suspect not. Doesn't exactly do much for her career, or more generally, equality in the workforce. But the tax policy makes us make those kinds of decisions.

I think she is more than happy to pay for her own childcare but is objecting to the fact she effectively also has to pay for the vast majority of other people’s childcare, and on top of that her own childcare is becoming more expensive as a result of that while she continues to receive no benefits from the taxes she’s paying. That’s hugely different to saying she wants her own childcare subsidised but most people seem to be missing that point, acting like she is trying to take something from taxpayers when the reality is she is by far a net contributor with or without being entitled to the childcare benefit in question.

This.

Help with childcare costs always used to be means tested, and when my children were little we got nothing even on statistically average salaries.