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!

This was exactly my point too! Why does the OP continually refer to losing the 30 free hours? You have to have something in order to lose it, surely? How can you lose something you never had? Do they mean they have lost out? But that’s just another way of saying I don’t qualify for x. It isn’t the same as losing something. Aren’t benefits there to support your income when you don’t earn enough to live? Not everyone needs them. If you don’t need them, that’s a good thing! It’s like saying “I’m really pissed off that I earn too much to claim benefits!”

There is the added bonus of if you work three days a week you will have some time with your child being able to take them out and be together.
You will be less exhausted and you could both be happier.

Because as of 1st September when they are introduced, I could be eligible.

But I am not, and there is a cost attached to not being eligible.

ie I am losing these benefits vs being able to claim them.

I’m pissed off that between £100-137k this now means I earn £0 due to not being eligible for this benefit, yes. That is quite a significant amount of additional income I need to earn to make it worthwhile earning over the threshold.

I completely agree with you, universal childcare should be just that, universal. Just like we have universal healthcare, universal state school education etc. People are (quite rightly) not excluded from these based on their earnings, why should their children be excluded from funded early education when they aren't from education post 4 years of age.

And I say that as a nurse, on 61k per year - I mention that as people have said they are very quick to use us as an example of 'someone in need'. My DH earns 80k, so our total household income similar to OP's (who could be a single parent/sole earner) - net income is probably more due to our tax system. No one apparently resents us getting funded childcare, but they resent OP - which is crazy.

It's such a counterproductive system, high earners then either cut hours or pay more into pension, reducing tax yield, and hmrc ends up worse off than if their policies were less punitive to higher earners, and often more impactful on women - clearly we shouod just stay home and look after pur children rather than aiming high. But that's labour for you, classist, sexist, ableist, and racist!

I will never see that kind of money - in fact my husband and I together will never see that kind of money. So I don’t entirely understand how it works with taxes but... If there are more benefits for high income earners then surely there would be a higher tax rate to support it? So you’d just need up back where you started financially. Or are you saying lower income people should pay higher taxes to support you? Where is this money coming from to support your childcare?

Agree with others that if I was to make a list of things to worry about, your childcare wouldn’t be on there for quite some time. Agree that it would be great if everything was perfect for everyone, but in a world where choices are to be made I feel confident that your child has plenty.

Yanbu. I hate the results of this poll. Whatever the threshold, it should surely never ever be the case that earning over a threshold makes you worse off than earning under the threshold. That's insane and is going to force people to go part time, put in their pension, etc etc rather than pay tax on a higher amount. There us a disincentive to earn more which is stupid in a stagnating economy

Op, you are wonderfully articulate and have handled the savages very gracefully.

I agree it should be universal, for the reasons you stated, YANBU ❤

There does need to be a cut off but the cliff edges and the system feel unfair - ie two adults earning £49k each keep child benefit, a single household earner of £100k doesn't.....

As I said upthread - we didn't get any help with our childcare - our combined household income at the time was about on a par with OPs, and I didn't expect any help (but did moan about the loss of the CB 😉).

Until last year (redundancy), DH was earning significantly more than the OP, and if we were paying childcare now, I would not expect state help. However, I do think that the tax system does need to remove those cliff edges that happen with the removal of personal allowances which make the marginal tax rates unfair.

No you are not losing anything. You are losing out. It is not the same thing.

Losing a benefit would mean that something you had previously relied on was now being taken away.

Losing out means you do not qualify for something.

If you don’t qualify for something then arguably you don’t need it. You haven’t lost a penny. You would like to claim a benefit which lower earners are going to be eligible for but you earn too much. This is NOT the same as having a benefit stripped from you.

And people saying you shouldn't be worried about this because your such a high earner are deluded about how far £100k goes in somewhere like London if full time childcare is needed. Take home on q01k is 5.6k. If you have 2 kids close together and nursery fees are 4k, what are you supposed to live on? If you're a single parent or have a low earning partner for example

Let’s just all be honest here, we now have a welfare state with an economy on the side. There’s now no incentive to work, you get the same type of lifestyle (and a lot of free time) for not working hard. Those who don’t pay for things without significant subsidised UC lifestyle also borrow and then go bankrupt and it’s then down to us to pay for everything again. It’s not sustainable. Goodness knows how middle class families survive in London, most of my friends have chosen just not to have children as you can’t have a career and then afford to pay for childcare. Makes no sense. I’d like to see the government put a price on free time, because when we are working 50hr minimum salaried hours (so no paid overtime) but you need to work those hours to keep your job, it’s means you actually have no time to do any domestic things yourself so you need to outsource but then that costs more than what you earn net on hourly rate as take home pay!

I'm would take an educated guess that the money is coming from the high amounts of tax OP is paying, I think she probably more than covers any costs her family incur to the state!

Yeah I mean ultimately, you can have it only one of two ways. You have universal childcare and you tax HEAVILY - look at the nordics - taxes are higher for far lower incomes - OR you have some sort of imperfect system based on income/hours/age.

I would Google the reasons why it's these ages regardingeducation. I imagine it's based on research as to when children learn best and some precedence. Some countries start school later. Grants for universities were taken away years ago. You might also find reading up about the creation of the Welfare State interesting, as this will touch heavily on the foundations of today's benefits - expectation or otherwise and what you're entitled to (for example statutory maternity pay). Taxation also pays for a vast amount of other things: policing, social care, the NHS. Some might help you, some not. I hope that helps.

My DH earns 80k, so our total household income similar to OP's (who could be a single parent/sole earner) - net income is probably more due to our tax system. No one apparently resents us getting funded childcare, but they resent OP - which is crazy.

But your net income is to support 2 adults plus dc..... clearly its going to be different.

Edit - shame you were too busy on the "-ist" train to notice that small fact eh

I agree it is mad thst people that pay the most don't get this small benefit for the brief time their children are young.

Many reduce their hours to stay eligible and may never increase them again costing the state much more in lost tax over the years than paying for the childcare would cost for those few years.

I have read and commented a few times on this post and im sorry I still don't get it.

I still don't get why you should take/ be entitled to something you really don't need. If you can't survive on 8k with some nursery fees for a few years then something is very wrong with your math.

Its there to support people who need it.

Every working person is paying for other people somehow. Im not exactly thrilled that I work my ass off and pay a lot in tax while some people don't work at all and seem to have a better life than me.

If we all got out what we put in then who would support disabled people that can't work? Who would support anyone else that can't work)

It wouldn't work. It doesnt work like that.

Its not fair but you aren't going to starve or be homeless

I haven’t read the whole 30 pages.

But to the allegations that the OP is greedy. Say for example, I work in a corporate. I decide I want to aim for work-life balance so I don’t go for promotions etc. My more ambitious colleague does and take on more responsibility and a lesser work-life balance for greater wages. We both have kids but I get more towards my childcare, so colleague loses some of the money she got through work I didn’t put in.

It’s not a perfect example and we don’t live in a perfect meritocracy where hard work is always rewarded.

But it’s a point I think is overlooked. And I’m not on 6 figures myself.

You’re missing my point. The government views education as valuable enough to be free to everyone. It doesn’t view the early years or childcare as equally valuable. Presumably because historically many women stayed at home and the government could just bank on their unpaid labour. Obviously most families can’t afford single earner households now.

You really don’t see my point - I’d rather have universal free / extremely cheap childcare and be taxed for it accordingly like the nordics/Germany etc because I think the early years are actually valuable in their own right as is supporting working parents.

I’m sure you’ve worked hard to get to where you are but you’re also very fortunate that you earn enough to not be eligible.
If you earn £160k and can’t afford childcare costs then you’re going seriously wrong somewhere budgeting-wise.

Are your diamond shoes too tight as well?

Anyone earning less than 60k is not a net contributor when the value of all services are considered. That means that a relatively small minority are subsidising the vast majority to varying degrees.

The point you are missing is that if a tax system results in marginal tax rates of near to or sometimes above 100% then productivity reduces along with tax paid.

It is not a matter of affordability but a matter of supporting the highest taxpayers to continue paying at the level they do. Without them the rest of the population is screwed.

Is it right that I should need to earn £137,000 to have the same take home pay as someone earning £99,000 but able to claim the 30 free hours plus tax free childcare?

It is not about affordability.

Marginal tax rates are what motivate people to do more or not to do less. Any system that creates huge marginal rates is inefficient and results in a lower than optimal tax take.

A lot of people are saying that you shouldn’t be entitled to tax payers money, but are forgetting that you are a tax payer who is paying a lot of money and should be entitled to this as your contributing more than your share into this system.The trouble is more people are being squeezed, so trying to find ways to lessen the impact,if that’s reducing their hours or paying more into a pension some even moving abroad to avoid this then what happens ? who is going to fund this system? I work but the amount of people I know who are reducing their hours as they are financially better off working less is crazy we shouldn’t forget that we need everyone in this system to make it work.