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!

No it isn't - it's pitched as help to virtually all parents. After all it is available to households with up to £200k income, depending on the split of income between them. There are tons of households with £100k+ income getting this benefit, and I very much doubt all of those "truly need it".

I don’t want to have to earn an extra £37,000 to pay for childcare that 95% of people get for free, while paying tax rates of up to 62%.

It just doesn’t make sense.

On that salary I would be having a daily nanny. My daughter did and she does not earn what you earn.

@OldLondonDad

Clearly then, you are wrong. It is not available to all nor is it pitched as available to all.

It is not available to me and rightly so.

A daily nanny would be twice the cost, and around 50% of my take home pay.

So I agree that, that's where the issue of it is, it doesn't take the household income, just one salary. But frankly, someone who earns 160k complaining about 'losing' 37k while everyone else on average salary still pay 12k tastes a bit like sick in your mouth.

If she shouldn’t have children - who should have children.

should those without jobs have children?

I've not RTFT, just the OPs posts.

A cliff edge like that is awful and I completely agree that we need to consider the disincentives it creates.

People seem to have suggested it's akin to being annoyed at not being eligible for UC, but the OPs point is that it's more like not having access to the NHS or all your neighbours having their bins collected but you having to organise a private company. While paying 100% tax on a portion of your income.

@ChildcareCost I know you haven't asked for advice on mitigating this but have you maxed out your previous 3 years pension contributions? Is there anything else you can salary sacrifice to get below the threshold rather than going part time, e.g. at my work we can buy an additional 2 weeks' holiday or access a bike or dental scheme etc.

Hey @ChildcareCost , I just wanted to say I’m in a similar position - solo mum with no child maintenance from the idiot father as he has gone back to university in middle age to do a free NHS course (a thread for another day)

I earn £130k inc. bonus so I can salary sacrifice to get below £100k but I have had to refuse promotions and it has really hampered my career. Also (tiny fiddle out), I’m in a tiny ridiculously expensive and unsaleable flat in London and even with a net salary just below £5k p.m I am broke as hell once mortgage, nursery and the insane service charge are taken into account. I have no way out of this as renting the flat out will increase my taxable income such that I’d pay at least 40% tax and lose the 12k childcare. Stuck. Utterly stuck.

Blimey.

Be the change then - don't sit and whine about things that most of the people in this group, 1) don't have experience of, and 2) can't see your point of view.

What are you doing about it?

How are you getting it changed?

All I hear from you is "wah wah wah I have to pay for childcare and its unfair". What is your solution?

But before this year, how do you think ppl on, let's say 40k were dealing with the full price until 3yo? Because this is what me and most my friends had to do, times 2 for 2 kids. So we 'lost' dozens of thousands of pounds, on a third of your salary. Childcare costs are extortionate and the system doesn't work, we need to make it work better for all!.
What you're saying is "boohoo me, I'm losing 37k out of my huge salary, boohoo for me"

Agreed. Cant believe shes actually bothered by this when she earns over 160 grand!!!

@KarmaKameelion

nice try at twisting my words

If she begrudges the childcare costs on 160k she had the option of “saving” that money on them that she so begrudges but decided to have them anyway.

If you have enough money to send your children to private school and earn enough, many people do because they can. When they’re little they need good trusted, reliable childcare too. Most parents plan for this.

That’s a separate point.

The particular point I am making is that a very, very significant incentive has been created with the 30 hours from 9 months because the effective tax rate through loss of benefits is so high.

You want kids you pay childcare costs, it was ever thus. But to then specifically create a 100%+ marginal rate over a large percentage of people’s incomes create negative incentives and no - is not fair.

Nope, society is not fair. The 1% still whingeing they don't have money is frankly grinding my gears.

Between £100-160k, I lose my personal allowance, I lose 30 free hours, I pay tax rates between 47-62%.

This means on that £60k of income I take home… £11k. So an ~82% tax rate on that bit of income.

Thats a really big incentive to find a workaround, yes.

Not that much of a gap to earn. Just work a bit harder. Hard work is what you lot always bang on about on benefit threads isn't it?

I cannot even fathom making this amount of money and whining my tits off about paying for a fucking nursery place. You have absolutely no idea what sort of position you're in and how much of an absolute toddler you sound, crying about how it's not fair, stamping feet.

Honestly try living for a week with negative money in your bank, no cushy safety net and wondering how you're going to feed the kids or keep them warm and you might garner a little fucking perspective and find something actually meaningful to bitch about.

Didn’t twist your words! Asked a question

And it isn't a separate point. You just avoiding my point. Because your problem isn't with how childcare costs should be properly subsidised like in other countries, or that the cliff edge should be revised and made fairer. Your point is 'I'm now paying more than 95% of parents, while before even ppl earning peanuts had to spend the same (and that didn't bother you)"

Are you suggesting that people who earn lower salaries aren't very bright?

OP are you struggling financially? Would you have to give up work due to not having this funding available?

If yes then it’s worth sending this to your local MP as that’s what the funding to for - to encourage people into work or stay in work due to cost of childcare that otherwise might have to be a stay a home mum or change jobs.

That's still 111k while most of us are on 35-40 (pre tax and pre childcare costs) Just saying.

What should the threshold be OP? Let me guess - just over what you personally earn 😂 Surprised you don’t have a nanny!

On a more serious note, the cliff edge at £100k for this and other purposes isn’t great. I’ve taken several pay cuts in my career for fewer hours and less stress, and currently make £120k full time - will be going back part time on return from mat leave which takes care of that particular issue for me.