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 never qualified for child benefit or 30hrs childcare. I accepted that I could afford to pay for it myself so it was fair.

How did "childcare costs fuck your career"?

Well no, because it means on that £60k over £100k you have an 82% effective tax rate.

Which is still well into ‘how can I optimise this to my benefit’ territory.

Then go part time, get a less well paid job and take the hit that way.

Tax avoidance and tax evasion are very different activities.

People who refuse to work more than 16 hours or are reducing hours to qualify for funded childcare are doing so for tax avoidance reasons. People who get paid for undeclared work are committing tax evasion. That’s a criminal activity. Equating them as being the same is ridiculous.

But why does there need to be a cut off? You can't have it both ways, saying that the OP is in the top 1% of earners (probably the top 0.5% of earners with young kids), but also that it would cost loads to provide people like the OP with the same benefits as those under £100k are getting. The £100k cliff edge doesn't save much money anyway as there just aren't all that many people with young kids earning that much, but given it also provides an incentive for those on £100-200k to actually reduce their income (and tax paid), it's even less revenue generative. It's an almost entirely pointless, fundamentally unfair, needless complication in an already too complicated tax system.

The help is for people that truly need if. You do not.

If you begrudge childcare costs, even being fully able to afford it while setting yourself up well in your industry while they’re little, don’t have children.

You aren't being excluded

You dont qualify

Its that simple

Not unreasonable at all. The £100k cliff edge is absolutely bonkers and anyone who thinks it makes sense needs their head checked.

But with this example, why can't the OP claim UC?

Over £160,000, and we're supposed to feel for this poor disadvantaged woman but look down on people on minimum wage who need a UC top up to be able to feed their family.

Nursery charge you a full day, OP mentioned earlier she isn't planning on using the full hours but as a business the nursery will charge you the full amount of hours they are open for. We are charged for 10 hours a day but reality is our little one is only there approx 7.5 hours every day.

I think the OP is being somewhat unreasonable, given how high her salary is. That said, I was thinking this morning about how unfair it is that 2 income household on £198k is eligible for the childcare but a 1 income household (or 1 high and 1 normal income household) on £100k is not. It should absolutely be done per household, not per individual.

My husband earnt over the he threshold. He works long hours and travels for work. Before I had dc I earnt 98k a year before bonus but was made redundant on mat leave.

I got a ‘part time’ job once my dc was one but quickly realised it was part time pay but full time hours and I was working myself to the bone and realised i was working to pay for dcs nursery fees so quit. Anyone will tell you that for a woman working in technology 4 years out of the game is career suicide. So I basically committed career suicide. I work part time in a school bow earning just about min wage.

It’s not 7x more tax for 7x more income.

Ignoring pensions, if the OP earns 160k they pay 28 times more income tax than someone on 1/7th of that salary.

Ah I see, thanks I missed that bit. We pay hourly so I didn’t realise this was a thing.

Honestly. Talk about missing their point spectacularly?!
This thread is wild. Almost everyone saying “get a minimum wage job if you don’t like it” or “why should someone earning £160k have childcare subsidies”. To the delightful “greedy” comments and accusing high earners salary sacrificing to avoid the cliff edge being responsible for the issues in the childcare system. Utterly offensive and untrue. We are talking about someone who contributes vast amounts of tax.
Are people so financially illiterate that they cannot see if you remove the incentive to earn more, you lose tax revenue. Because why should anyone earn more but take home less? Who does that?
That if you engineer a system that keeps working parents in work - you increase tax revenue - for the long term. You also keep mothers in the work place and lower inequality.
That an equitable system allows net contributors to take out some of what THEY have contributed, otherwise they look at ways to reduce their tax burden.

The childcare sector is on its knees because it isn’t be funded properly by the government. The universal 15 hours has wreaked havoc. Maybe if we kept a minimum hours worked requirement that would be more sensible?

Nice. Swings and roundabouts, we benefit from higher taxpayers. Does that make us cheeky fuckers?

Why do you want benefits for all and a socialised system?

Do you want to claim Universal credit as well and talk about the money you have lost due to your income being over £40k and having a spouse possibly?

If you want to have a socialised system for all then you're going to have to pay more tax, then you can claim winter fuel allowance, nursery fees for 30 hours, universal credit for everyone as a basic wage - but your wages will decrease dramatically if youre then paying a top tier of 50% tax

Absolutely clueless comment. You make assumptions about short hours, pay no attention to training, stress, sacrifice or any other factors that go into earning higher salaries.

So go work in Tesco and get free childcare and UC top up then? Would you be happier relying on state handouts?

Me me me me me 🙄

You do know that before 2024-2025 the 30h were only for 3+ yo, so before that, most ppl had to pay full price too. You earn £160k, get a grip!

I appreciate your point about the irrationality of it on paper OP, but I do think the reality of wealth distribution is more nuanced. If I were you I would write a letter to your MP, and then focus on spending more time with your baby while you can rather than posting about financial policy.

In case you’re ever wondering who, aside from child development specialists, is telling me most repeatedly and firmly that a nine month old shouldn’t be in the nursery you resent paying for, it’s multiple friends of mine who work in nurseries.
@

That’s a ridiculous comment and one that is conflating a number of irrelevant comparisons.

The point being made is the current system of tax free personal allowance removal and removal of funded childcare hours both kick in at the same time and can create a marginal tax rate that can be over 100%. That is a disaster for parents and the economy. Literally nobody wins.

I must admit I tapped out at more than £160000 salary.