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!

A family with nursery age children where both parents are on 45k end up with more money under the current system than a single earner on 160k.

Had the removal of the personal allowance been index linked since it’s introduction it would now kick in at £176k instead of £100k.

I'm with you, OP. It's a travesty that I can't claim universal credit or jobseekers on my meagre £47k salary.

Irrelevant false equivalence.

You are probably being sarcastic. It’s hard to tell though as £47k isn’t a lot these days. But so many people on here are missing the point. Research has shown that having this rule where you cannot get free childcare if you earn over £100k REDUCES the tax take of this country more than the cost of providing the childcare to all. IF WE GAVE EVERYONE FREE CHILDCARE WE WOULD BE BETTER OFF AS A COUNTRY.

Why the hell aren’t we doing it then? Because the small minded - the likes of whom can be seen on this thread - would bitch endlessly about how the government are giving freebies to the wealthy that’s why we’re skint blah blah blah. The optics would be terrible. It’s a wilful refusal to understand basic economics.

Sorry you earn over £160,000 and you are expecting childcare to be subsidised for by the tax payer? Has the world gone mad??

This scheme wasn’t there until recently so the rest of us had to pay for all of our childcare costs regardless of income and therefore decide if they could afford to have children. Now you want me to pay for yours with my taxes and you keep your income when you earn 3 times what I earnt when I was paying for childcare?

This scheme is to help families where childcare costs are such a high proportion of their income that it’s not worthwhile them going to work and I’m fully supportive of it but never in a million years did I expect someone to come on and complain at £160000 salary, in the top 1 percent of earners that it’s unfair they don’t get any support 😮

Reading through the comments on here…just waiting for the ‘pay your fair share’ comments, which would be the case if you dared to even think about private education at a later stage too.

I agree. Childcare should be universal like school funding and the NHS. Then the well off can choose to pay for private which they often do ; private school, private medical appointements etc.

Nobody earning under 60k is a net contributor. The OP would still be significantly subsidising the majority of others even if they received funded childcare. What you are moaning about is wanting them to subsidies you more. The notion that lower earners are somehow subsidising higher earners under any circumstances is ridiculous.

You state that the scheme is about helping families where childcare costs make it not worthwhile going to work. Well the current system can create marginal tax rates of over 100% for higher earners. I think that is just about as not worthwhile as imaginable.

The system encourages higher earners to earn less taxable income. That needs to change otherwise there’ll be no money to continue the subsidies for those earning below 60k.

Higher earners aren’t the enemy of the low paid, they are your lifeline. Without them you’re destitute.

It depends on how you see ‘benefits’. If you want them to be only used for the most disadvantaged then they all should have salary limits including state education and the NHS. But all that does is encourage people to stay under a certain amount of salary.

We desperately need more net contributors and the people most likely to raise them are the we educated, high earning women who aren’t being encouraged to have children in any way. The disadvantage of children to these women is huge. If people can get past their ‘eat the rich’ mentality for a moment then you can see it makes very sound policy to encourage well educated women to have more children.

The op has dealt with responses clearly and not at this level of post.

To be fair you’re probably right. I live in a cheaper part of the country, kept my mortgage low on purpose, own my car and have one school aged child.

I always find this line of argument fascinating since I live in Germany in a state where 25hrs of childcare is available to every child over 12 months for free, regardless of their parents' income, and further hours are heavily subsided, capped at £200/month per child. Here, the childcare system is seen as part of the education system supporting children with becoming socialised, not just as a way of enabling parents to work, and no one seems to begrudge higher earners their "free" childcare. Of course it has benefits for mothers in particular since it means no one has to choose between working and staying at home, but overall that benefits the economy because there's more tax income, which seems totally sensible to me.

Yes of course you’re going to turn down that £100k job offer because of the tax system….better just stay on that part time minimum wage slog.

I thought I was the only sensible person on mumsnet…..thank you for being the other one xx

How dare these low paid workers expect anything…let’s just throw them a few more crumbs!

So get a minimum wage job and get the free childcare. Problem solved. 🙄

Yes but if every net contributor did this there would be no money left…. I don’t see how people don’t see this?

this policy has a negative affect on the public purse.

I know people who go down to 80% and / or salary sacrifice in order to stay below the threshold for precisely the reason you said. If you can afford the cut in take home pay (of about £1,000 a month?) I would. It’s only for a few years and your pension boost will serve you well in the long run.

You’re not really understanding what changes high earning women in particular would make.

I don't understand the point of the country losing tax money amd spending a raft of money on administering the scheme, only to stop higher earners getting a benefit. From the looks of this thread though, the general public's inability to grasp the point is the reason why government departments make so many terrible decisions.

I think the posters who’s only response is ‘oh I earn less than that, so why don’t you f off you cow’ are failing to engage in the problem that the removal of the free hours creates.

I get £0 take home pay on an additional £37,000 of income next month. Theres no point in earning it really. If you earn less than that £37,000 - you actually would lose money. So yes - taking a lower paid or part time job would be a better option.

No a eg £160k earner isn’t going to take a minimum wage job (and why suggest it, as they can claim the childcare hours while earning 4x the minimum wage) - but they can put up to £60k in a pension year (avoiding ~£30k of tax) or work four days a week and still claim the childcare in full at an adjusted net income of £99,999.

This would cost the government £46,000 - and the incentive to do it is… that earning the difference isn’t worthwhile as there’s potentially no net benefit to earning it. Which is a situation created by the tax and benefit system.

I have no idea what you’re talking about 🤷‍♀️

By the same token, OP, you are losing out on the amount of benefit you would receive if you didn't work at all. Do you think that's unfair as well?

And if you had to take a legal issue to court, you would have to pay for it yourself so are potentially losing out on several thousand pounds' worth of legal aid. Ditto if you commit a criminal offence. Also unfair?

You could look at it the other way round, of course. I'm sure I work quite as hard as you do, and I also worked very hard to get higher level postgraduate qualifications which I needed for my career. But I earn less than a third of what you do, mostly because I work for a charity. Do you think that might be unfair?