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!

You haven’t lost anything because you’ve never been eligible. I agree it should be a household total and benefit as a result but it’s been this way for years.

No - au pairs are really for providing a small amount of childcare support, not providing full time nanny-type help.

I think au pairs seem to best work when you have older kids who need ferrying about - but, I don’t have a spare bedroom anyway.

I also understand where the OP is coming from. Well done OP for getting where you are. 👏

You earn over £160k and quibble about losing /paying £2k a month childcare

That’s a pretty sexist take considering husband and I have had many many conversations on this. It doesn’t just affect woman but it does disproportionately affect woman. I have had to put my career on hold as it didn’t pay to work. I will never get my high earning career back, my potential is gone. I’ve gone from a 6 figure salary to just over minimum wage and I fucking hate the successive governments who didn’t support me one bit.

With any scheme that is designed to help people, whether that is subsidised childcare, free prescriptions, free school meals, PIP, or what ever - there has to be a cut off. That means some people will be in the grey area where is maybe doesnt seem fair but if in this example you said ok. someone earning £160k can have free childcare than all the people earning £220k would then say well what about us and on and on until you have people earning 5 million wanting free childcare - where does it end?
What is fair is not always equal.

At £160k even taking off the £37k pretax amount for childcare you are still earning £123k which no isnt a millionaire lifestyle but is still hell of a lot more than someone earning £30k yet you are begrudging them help - even with the 'free childcare' they are still only 'earning' £50k which is still more than half your salary.

It is just not possible for EVERYONE to be in jobs earning £100k plus - someone has to be the cleaners and receptionists and uber drivers. You are lucky that you have the skills, intelligence and environment that enabled you to get that high paying job. You paying for childcare doesnt mean that you won;t be able to feed your kids or pay your mortage (and if it does then you seriously need to re-evaluate your budgeting skills!)

State education withdrawn for high earners? 😂😂 of course not silly. Because that would mean the rich people All putting their children in private schools! And that. Is. Unfair. Private schools are usually so much better than state schools, we don’t want to give them even more of an advantage. So no, they should use state schools like the rest of us.

But they do need to pay more than us for childcare before school. That’s only fair too because then they don’t get anything for free. What? I’m a hypocrite? How so? Oh. Oh. Yes I see. So I am..

🙄

This ☝🏻100%

This!
Give over OP.
I am constantly shocked and annoyed by people earning this much feeling hard done by.

Also, what kind of job pays that much that you don't have to be that smart to do?
Breaking News!!! Parents have to Pay for Childcare Shocker 😅

It hasn’t been this way for years, 30 free hours from 9 months starts next month.

It’s a loss because it’s money I could otherwise claim - and probably could claim by working fewer hours and using salary sacrifice.

So there’s a logic to me working 4 days, paying less, claiming the hours and being probably better off overall (albeit most of that benefit being in my pension so a longer term benefit).

I know a lot of people making themselves eligible - if you earn under £137,000 in my example you have to make yourself eligible, else actually lose money.

This. I also don't get people moaning about their whole salary going away on childcare costs. Why don't you take care of your own children then if it doesn't make any difference? Why be having children in the first place?

As for childcare as a universal scheme I think it was the Scandinavian countries that first instored free universal childcare so all women could work. It makes financial sense for a country to have a max of people in work.

This is true, and I don't blame anyone who chooses to work less when the sums involved are so large. I'm not sure people have necessarily realised what a huge difference its about to make.

Not so great for the rest of us though!

I agree with you OP.

The cliff edge is very badly designed and I think a tapering off of this benefit would make far more sense for the individual and the state. As you say it just disincentives earning between 100 and 137k.

But what about 2 earners in one house hold who earn 99k and therefore total income of 198k and they are eligible. Is that fair?

A well designed tax and benefits system should mean that earning more always makes you better off, even if it is by a reducing amount. Otherwise you create disincentives which end up reducing tax income and increasing costs.

At the 100k threshold you have both the loss of personal allowance and the loss of funded childcare. That creates a cliff edge situation where you earn £1 more and have significantly less money. So people salary sacrifice or cut hours to avoid it.

If it was at least tapered, then people wouldn't do this. Meaning they would continue to earn and pay tax over £100k, and would contribute towards the childcare costs. Instead they cut pay to 99k, don't pay that extra tax, and the govt pays the childcare.

Its a stupid approach, regardless of whether you think high earners deserve the help or not.

I agree it’s obscene that a household earning £198k is eligible, I’m unsure as to why you seem to keep making out everyone taking issue with your stance on this thinks that that element (it being by individual not household) of the current system is fair or morally right? I certainly don’t.

Can you really not understand why your take on this has caused such a strong reaction, when you step back and look at it more objectively?

I’m not being sexist. But I have never met a high earning man who has considered reducing his hours in order to look after his child and reduce childcare costs. I’m sure there may be some out there but I’d say they are pretty rare.

My point is that if this benefit was made universal then it would benefit all those men (and there are more men earning significant sums than there are women) who don’t need or even want that benefit but would most likely take advantage of it anyway. Thus a huge waste of tax payers money.

There is no maximum income cut off for PIP.

Or for various other schemes that help people, like pensioner bus passes or statutory maternity/paternity pay.

So no, there does not have to be a cut off. We run multiple such schemes where there isn’t.

For all those bleating "bog off, you rich sod!", maybe it would help to simplify the issue a bit.

At the point at which parents are begging their bosses not to give them a pay-rise because they have two under-2s and it would be a financial disaster for their families, there's clearly an issue with the system.

I was going to write similar .
My DC are 23 and 25
We (DH and I) paid full time Nursery Care .(both NHS )
DS got a discount in his last term ( so Easter to Summer)
DD got a sibling discount while both were there .

No Free 15 hours or 30 hours .
How did we cope ? .............

And yes I sometimes wondered if it was worth working but back in those days you were not guaranteed your same job back , just an equal role .

I’m not sure why people keep deciding I begrudge others getting help - I don’t, and I have never said that.

I think the provision should be universal.

And as for ‘there has to be a cut off or people on £220k or £5m will be able to claim’ - the numbers of parents of preschoolers with these kinds of incomes will be tiny, so the cost will be insignificant - and, these people will be paying far, far more tax each year than they cost, even with the nursery hours.

As someone who used to be a high earner, please change your attitude. It is a privilege, often a hard won one, to bring in a high income and be a net contributor.

This scheme is mainly intended to help parents work who would otherwise not be able to afford to, and give the ‘squeezed middle’ some help to raise the next generation during the most expensive years. It may help enable lower paid professionals such as key workers (who we all rely on) to be able to afford kids.

You should have enough coming in to make a savings, pension and investment strategy for yourself and family. Focus on this, and your career goals. What do you want to achieve - what difference do you want to make professionally? If you are considering working less due to this reasoning, you’re in the wrong job.

My husband will be working 4 days a week from sept. There you go!

You can actually earn quite a bit (gross salary) over £100k and still receive entitlement for the hours, since it's net adjusted income, not gross.

My DH earns £125k, and we are still eligible.

1. He has to pay a fairly high pension of 12.5% as standard anyway
2. He pays into a pension scheme that already gives tax relief at basic rate, so £1.25 per £1 of pension contribution is taken off additionally.
3. He's in an EV vehicle scheme so a monthly payment comes off the gross too.

This get to under £100k net adjusted income.