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!

By going on and on about this injustice for ages the Financial Times did at least do an article on it. It damages the poor really because women work less to earn less so there is less tax and the poor get less money so it is very counter productive. It cost about £30k per baby in a London nursery or £60k for a daily nanny in London if you have 2 or more children under 2. That includes employer NI and pension you must pay for the nanny (almost every other small employer in the country is exempt from employer NI but of course not hard working mothers...)

The 15 "free" hours for 3 year olds is what a criminal asylume seeker who has broken every law in the book to come here - that is what the state thinks of women who date to work so hard they pay the highest tax burden in 70 years and earn "too much". The state spits on us. And if you even dare to consider doing the best for your child with a private school as our family does the state hates you even more and since Jan 2025 has lumbered you with £10k a year £16k of before tax income) extra VAT (2 children at day private school). The whole system has the effect of reducing productivity.

Because they earn very little and you earn a lot

Statements such as this really grind my gears. What about people who pay a fortune in tax but don't have any children? Why should they subsidise the people who have children that they can't afford to feed or pay childcare? I bet the OP has worked incredibly hard and made many sacrifices to get to her well-paid position, why should she be penalised for this when someone who arsed around at school, left with few or no qualifications and has never worked qualifies outright?

The OP has every right to be pissed off given the gigantic tax bill she must face each year. The politics of envy wins again in the national competition of 'race you to the bottom'.

OP, check if you have last years allowance left for pension that can be used for this year, would it work ?

Unless household B is a lone parent though they won’t actually need childcare.

Low paid workers are not contributing to anyones childcare costs.

100k is 5500 a month net, with student loan it's less than 5000.

Mortgage on average flat in the South East can be over 2000 a month. Train fare another 500. Council tax 400. Add in nursery of 2000 and there isn't much left really is there? Thats to live in a flat.

It's hardly "an insane salary", gas engineers are earning more than this.

100k in the South East is more like 50-60k in the rest of the country. Crazy to have to pay marginal tax of over 60% and get screwed on childcare.

Well I guess her tax bill covers hers, yours and my tax free childcare. Cliff edges in tax are really rubbish and this is probably costing an insane amount of lost revenue, it's the government's fault they set the rules.

How about you just pay for the child/ children you chose to have leaving more in the pot for people who are actually in need of the financial support ?

I have 3 year old twins. I've missed out on any free childcare as I've not been in work. And I've haven't been able to afford to work, as childcare for both at the same time is extortionate. I want to work. Only now they've turned three can I put them in for their 15 hours, and start job-hunting. Youve been able to work, climbing the career ladder, getting payrises, securing your future... Are your diamond shoes too tight too?

There needs to be a cut off somewhere. My older DC were in nursery before 30 hours funding and tax free childcare was a thing and I had to pay full cost. My youngest was in nursery between 1 and 3.5 before funding expanded to include children from 9 months. I had much less than £100,000 to so I don't have much sympathy for you.

Threads on this topic always contain advice on how very well off people could reduce their on paper income to qualify for state help (known as benefits for poor people and allowances or other euphemisms for the better off), but heaven help someone on universal credit if they dare earn a tenner in cash handing out leaflets for their local takeaway. That's fraud and ripping off the taxpayer.

Given that she pays 7 times more tax as you say she should be just as much entitled to the benefits for childcare available. If people like OP up and leave which is happening then there won’t be her tax contributions available to subsidise whatever benefits you may be claiming.

I think a lot of the ire comes from OP's salary however not a lot of consideration is being given to how much her take home pay is after tax and contributions. OP isn’t the millionaire/billionaire that don’t pay their fair share.

95% of other people get it...because they don't earn as much as you do?

If they had to pay that in childcare, they wouldn't be able to put a roof over their head, or food on the table. You are being insanely unreasonable.

Honestly, this battle infuriates me - I’m in a similar position to you OP, and I’m aware it’s a fortunate one - but surely the ‘tax payers’ money should be for everyone with children, including those who have paid a higher tax rate for years and years, without claiming any benefits. I’ve got a tax accountant who was equally as baffled when I explained that for us to not use the funding because we’re not eligible it will cost us more than it did before the funding existed.. I’m toying with working 4 days per week and salary sacrificing for the next 2 years, but similarly to you, I’m in a male dominated industry and want to progress. This won’t encourage progression and I’ll have a battle when returning justifying my reasons to do it.

But you earn more than that anyway so its not an issue for you! Just be happy with what you have!!

No.

Why earn £3500 or so gross, £2600 after tax, and yet only have £500 to actually spend at the end of it.

About half of that is going to go on travel and clothes for work - so it's really more like £250. You have the added stress of both parents working meaning getting home for childcare pickups, fitting all the errands in to the weekends etc.

For £250 a month? Nope, not worth it.

That's not how taxes work though is it. You wouldn't be able to claim Universal Credit, or PIP, if you weren't eligible purely because you pay a lot of tax.

Well - say I earn £160k, it creates a 82% tax rate on any income over £100k, which is quite a significant disincentive in itself.

So it is still an issue - I’m not worse off that if I earned £99k, but the net benefit is quite small compared to the sum needed to earn it.

Putting your child into childcare for 50 hours a week is a lot, OP. Did I read it right, they’re at nursery 10 hours a day 5 days a week?

Surely between you and your partner you can reduce this a bit, just for a couple of years whilst they’re little.

People seem to really struggle to understand that the loss is so significant it creates incentives to eg work less like you are suggesting.

People won’t work for free.

Earning an extra £37,000 and having nothing to show for it because of the personal allowance removal + 39 free hours seems quite clearly insane to me.

You earn £160k…my heart bleeds for you 🙄 🙄

At £160k op is well past the cliff edge. They're behind the safety fence and down the road.

You earn £160,000 a year. Far more than a lot of people including those caring for your child up to the 50 hours a week the private nursery is open do. And you are moaning about earning too much to get free childcare ?
YABU