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!

Working hard doesn't pay you are right - especially shitty minimum wage zero contract hour care jobs.
Earning well evidently doesn't pay either. And OP could always pack it in and go for a job in care to get the free hours.
Although shift work isn't accommodated well in nurseries.

It isn't. If the OP is a single parent I think people will react differently as they may be solely responsible for the childcare bill and also may not be able to share the physical care with another person.

Benefits are based on household income so it is relevant to know what the actual income is.

I’m just saying that the current cliff edge system makes no sense. The loss of personal allowance is painful (I’m in that boat) but with the loss of free hours you can actually go backwards - which is ridiculous.
Very few earn btwn 100-140k these days that have pre school kids.

It’s not a loss to you, you don’t qualify it’s like me saying I didn’t get the grades to go to a RG uni so I’ve lost money as my earning potential is capped… or I missed a discount in a shop so I didn’t get 20% off therefore it’s cost me. Bizzare thinking.

It’s not a loss to you, you don’t qualify it’s like me saying I didn’t get the grades to go to a RG uni so I’ve lost money as my earning potential is capped… or I missed a discount in a shop so I didn’t get 20% off therefore it’s cost me. Bizzare thinking.

Bizarre analogy

That applies to everyone who works and receives zero benefits though which includes many low earners.

If OP is a single parent - seems like a single income household as I can't see anywhere detailing the fathers income - maybe it would be a good idea to ask the father to contribute to childcare costs or contact the CMS.

It's very simple to understand really, the tax system is totally separate from the benefits system. They can't do % increments, it's a bit like the child benefit cut off. It would cost them to much to change the system, so there has to be a cut off somewhere. Often those just over sacrifice into pensions to keep claiming.

But face it OP you are well over, I'm assuming that when your child reaches school age you'll be sending them private (think if nursery as private school) you wouldn't expect the government to pay towards there school just because you aren't using a state school would you?

Really these threads are getting annoying. You will find many people here who also live inexpensive areas who earn a heck of a lot less then you OP. You cut your cloth accordingly, you can actually afford it, I know many mums who didn't go back to work until their children where at school because 16 years ago there where only 15 hours funded at 3 years old. And so they took career breaks until the family could afford for them to go back to work. That wasn't very long ago. Either that or they where paying all their salaries for childcare and struggling to make ends meet. Many still do this just to stay on the career ladder.

@Lauren1983 so why does that mean the OP shouldn't get help with childcare costs?

That applies to everyone who works and receives zero benefits though which includes many low earners.

And which low earners get zero benefits?

You’re right. Many women stayed at home because they couldn’t afford childcare.
There are women now in that exact situation. Men earning over 100k so the mum (and let’s be honest, the stats show it is still often the mum) doesn’t go back to work because it no longer makes financial sense.
This situation just perpetuates inequality. Funding childcare across the board is beneficial to all.

But the question isn't 'can OP afford childcare'. It's whether a policy which leaves people in the situation described is operating in the right way.

Given the policy is based on individual earnings, not household income, your question is not relevant.

By providing generous childcare subsidies that are removed at a cliff edge, the government has created very significant incentives for higher earners to work less, pay less tax etc. - as they may still end up better off overall.

That is irrational of the tax system.

The extra £37000 you need to earn is more than a lot of people earn, before stoppages anyway.
Things were different when my dd was little. We were also fortunate i would reduce my hours abd we had family that could help. I am therefore not up to speed with the current scheme. I agree that some things should maybe tiered instead of a sudden drop off, but also that it should be based on household income, not just that of one person.

Ones with mortgages or who own outright and have no dependents. You don't automatically get benefits just for being on minimum wage.

YANBU ... And take home for two will be greater than take home for a single earner in a household.

For those frothing about 160k salary, you do realise some of us are subsidising a household searning £198k pa ... £11328 per month take home... So they can get cheaper childcare... It should be tapered... Or should be based on family income...because if not, it doesn't incentivise people to work more ... But rather chuck stuff into pensions, go part time etc..

Your first paragraph is completely wrong.
There is tapering all over the benefits and tax system. Just one example: child benefit is clawed back gradually through your tax return it isn’t just all or nothing. It is tapered between £60k and £80k.

So for example, the child care benefit could be tapered between £100k and £120k. It wouldn’t require any costly redesign of the system.

That would at least bring some consistency to the process of withdrawing benefits from higher earners.

Ones with mortgages or who own outright and have no dependents. You don't automatically get benefits just for being on minimum wage.

How many people on minimum wage have a mortgage or own out right? And at some point they will get benefits despite being on minimum wage eg state pension etc

People who live in areas with cheaper houses or those who have inherited.

If you are in a couple and both work full time for NMW it comes out at about £40k a year. It is not impossible to get a mortgage on that figure if you are looking at modest homes.

YABU. It’s a new thing- you haven’t lost anything, you just aren’t entitled to it.

DH and I aren’t either as he earns over the threshold. It’s the price you pay for being a higher earner. In the long run you're still better off than 95% of people in the U.K.

She’s really not stinking rich.

premier league footballers, some music stars, some bankers and CEOs are stinking rich.

a salary of £160k is lovely. But not stinking rich.

Over a lifetime it’s pretty unlikely most people will be. I was for decades until I started claiming my state pension and now I’m not because that’s more than the tax I pay on my occupational pension.

This is the argument always wheeled out in edge cases. If you do x, I will flounce and it will cost you y, so THERE! Tell us: will you in fact opt to demote your career and get the childcare funding, or will you in fact just carry on as before and pay the income tax you hypothesise the state will lose because actually you’d prefer career advancement prospects and not going part time after all?

This is every bit as mad as someone complaining they don't get free childcare because they don't have children!

I have seen that on here, too, btw. She reckoned she should get an extra £20k or whatever (like you, she calculated the sum of her 'loss') since parents get free money, so why shouldn't she?

You and that person are as logical as each other. Nobody forced you to have kids or to earn a small fortune. If you're so keen to get your hands on the money, get a lower-paid job.

It’s not stinking rich but it’s enough to pay for your own childcare …

It’s ludicrous, I agree. Our tax system doesn’t make sense. It punishes those who want to progress in their careers. It encourages us to stagnate our career and keep earnings under £100,000.

The loss of the personal allowance when you earn over £100k was introduced in 2009. £100,000 income 16 years ago was relatively high compared to now(when we are discussing inflation and stagnation of wages, cost of living, house prices).
£100,000 does not go as far in 2025.

It needs try be adjusted.