The £100k childcare cliff edge - how is anyone meant to make this work?

[Saladleaf]

I completely understand that on paper, a six-figure household income sounds like a lot. I’m not trying to be ignorant of the fact that many people are struggling far more. But for anyone actually living it, especially in the South East, the reality feels very different once you factor in childcare costs.

We’re looking at full-time nursery fees of around £2,500 a month per child, and I honestly don’t know how families are supposed to make it work once you hit the £100k cliff edge and lose access to the 30 free hours. It’s completely unsustainable.

I know some people say you can get around it by putting more into your pension so your income technically falls below the threshold, but that just isn’t realistic for everyone. With the cost of living, mortgage, and general expenses, we simply can’t afford to take home hundreds less each month. We already don’t have holidays, don’t buy new clothes, and don’t even have a car. There isn’t any more to cut back.

It’s not even about wanting handouts, it’s that full-priced childcare in this country is so eye-wateringly expensive that it makes working impossible for many women. The system actually discourages the lower earner, usually the mother, from staying in work.

A friend of mine is a good example. Her husband earns over the threshold, and she’s just spent years retraining into a new career that she’s passionate about, but is now entry level. We worked out that if they have a baby, it would literally cost them money they can't afford for her to keep working once childcare, rising mortgage payments and bills are factored in. She’d have to give it all up. It’s so demoralising.

And the whole system makes no sense. Two people earning £99k each can claim free hours, but one person earning £100k can’t. Someone on £50k with one child gets support, but a couple on £100k with two children get nothing, even though their childcare costs are double and they are taxed more. It’s not unreasonable to have worked hard, built a decent career and want two children, but the government seems to penalise you for it.

Other countries manage to offer affordable childcare to everyone because they see it as essential. Here it just feels like you’re being punished for trying to do well. For those of us in the South East, it’s even harder. Living costs are sky high, childcare is extortionate, and it’s not realistic to just move somewhere cheaper when your jobs and lives are here.

It feels like you’re being backed into a corner. I find it so demoralising that the system seems designed to push mothers out of their careers, especially when you’ve worked so hard to build one in the first place. AIBU in feeling like this?

Yes it doesn't make sense that two people can earn £90k and get the funding but a couple with one person earning £100k can't but it's the same with child benefit in that it's not a joint threshold. You should be able to afford nursery for one child with one of you on £100k though. It's not forever.

@Saladleaf I agree with your point about the cliff edge

Not sure about the rest of it

Who brought in this cliff edge? Government spend so much time tinkering around with weird stuff but really obvious oddities don't get changed. But I actually don't know how this one was created in the first place.

Exactly. I'd like to know what year it was brought in also, with no change in inflation or weighting to wildly varying living expenses across the UK.

completely agree OP

I agree with you completely. The cost of childcare here is absurd. My cousins in Amsterdam are faring much better; their childcare costs are a third of ours.

I agree. It’s a terrible policy and discourages growth. I actually think it’s too keep women in our place - the years you lose by stepping back from a professional role in your 30’s often mean it is difficult to reach your full potential in a career. Even on a healthy salary over £2000 a month on childcare (which probably won’t even allow you to do your job so you are stuck working in the evening as that is generally what a six figure salary requires) is an excessive amount of money.

It is a temporary expense. People have been complaining about nursery fees for years and now there is more help than there ever was. It is a tough period of life if you’re working but for many people keeping a career and pension going are worth it longer-term. So yes women have been making decisions that might not be financially advantageous in the short term for ages re childcare and most of them will be earning much less than £100k.

Are the costs high? Yes. But they also should be high. Looking after babies and toddlers shouldn’t be done on the cheap. I remember a former minister (might have even been Liz Truss but I can’t remember) proposing lowering ratios for cheaper childcare and everyone was outraged.

Yep. At a point where I should be looking to be promoted I’m holding back and dropping a day to come in under that threshold. Win for me short term as more time with my baby, lose for me long term with regards to salary and pension.

I agree here. The policy needs to be reassessed for 2025

I agree, and it's forcing women who have worked just as hard as men in their careers to become a SAHP against their wishes, which is detrimental to their career aspirations and general wellbeing. It's extremely hard being a SAHP with no support or village, and is not something you should be forced into. That's if you can even afford it on £100k in the South East with the cost of living.

It was Jeremy Hunt. Remember him?

while I agree with the sentiment - what is the solution? If low income people didn’t get help with the childcare benefit - then they wouldn’t be able to work and would have to rely on benefits solely. Then this would be another thing that people would complain about. There’s no solution other than if the government do what they do in other countries and have free childcare at people’s workplaces or overall just free childcare as a whole. But it’s not like that and people have to work- so it makes sense that people who earn less get help with childcare to allow those to work and if people can afford it because they earn over the threshold then they pay for it themselves

It is completely insane.

With the new 30 hours from 9 months, I lose £15,000 on a £27,000 annual bill for one child.

I need to earn £35,000 over £100k to break even on earning £99k plus claiming the hours.

It gets worse. I have an older child, and lose 15 free hours and tax free childcare there too.

This means I basically get no take home pay between £100-150k.

Everyone I know earning <£200k seems to be doing some juggle of salary sacrifice or part time work. Insane tax system to incentive the top ~5% of earners (who pay about half of all income tax) to actively work less and reduce their tax bills.

Totally agree. There have been a number of interesting posts about this, I recall one that made some really good points about how much income tax is lost due to people (mothers mainly of course) going part time to come under the threshold (notably female GPs and similar). It's a ridiculous policy.

Also in SE and 100k income is really not that much after living costs...

You have to factor in to your budgeting that you CANNOT earn over £100k. It’s what you have to do. There’s no way around it unless you earn £150k+, only then will your take home be higher than it is at £99,999 if you have two preschool children. That’s the insanity of our tax system.

And yes in the long term the government would be much better off if it gave everyone free childcare, but it cannot explain this to the public, so they cannot do it as people would think they’re giving handouts to the wealthy and we have less money for public services. A position has been engineered where EVERYONE loses. It’s madness.

We’ve just decided to pay £20k into the pension, with a view to paying nothing into pension for a couple years once kids don’t need the free hours.

Make childcare a universal benefit.

3% of parents are excluded from the system. Huge amounts of income is either going untaxed (pensions) or not being earned (part time work or people having to quit). It will pay for itself.

It basically says to women partnered to "high earning" men they shouldn't bother to work which is ridiculous. DH is on about 95k so we have to be really careful about his bonus and pay into pension.
My 22k part time salary is actually really useful to us as it isn't taxed as much. Plus I'm a teacher so I like to think useful to society that I work/ my own pension etc. Our actual combined salary is the same as two people on 65k so for the South East we aren't exactly rolling in it once you pay the mortgage etc. If I worked more days a week then I'd just pay it almost all back into childcare as the 30 hours is actually two days of stretched funding.
It's a complete quagmire basically! We are lucky we can afford to keep below 100k for him and I've found a childminder that accepts the funding without a load of extra charges!

Most of our friends are in a similar position although quite a lot of them just don't get the funding. We are all stopping at two kids as er can't afford any more.

Either you are very shortsighted that you cant see paying more into your pension to get to £95k + 30 free hours works out financially better each month or you are on much more than £100k in which case you are living well above your means!

I agree. Why can other countries seem to offer universal affordable childcare but not us? Why is the UK any different when we already pay some of the highest taxes? I don't get it.

Childcare costs have increased exponentially so those on over £100k paying full price are now paying a disproportionate amount. For those with two children it's just not feasible.

Which scenarios involve forcing women to become SAHM?

Both earn over £100k -pension increase/cut down hours to under the threshold if they're that bothered, no one needs £200k plus to live on even in the southeast

DH earns £100k plus, DW earns £30k - surely better off if DH reduces salary to under the threshold or goes PT and DW stays working?

DW earns £100k plus, DH earns much less - DH becomes SAHD.

It was introduced in 2010/2011. £100k in 2025 is roughly equivalent to 60k in 2010. It’s madness.

I put everything over 100k into my pension (I appreciate you’ve said you can’t do that)

But how much is being paid into your pension?

This means I basically get no take home pay between £100-150k.

But an amount is going to pension long term gain .

Old days there was no support no free chikdcare it was much worse

It doesn't have to be sustainable. You just suck it up for a few years so as not to interrupt your career.

That’s not pension - that’s the income I need to earn to recoup the loss of benefits because I’m not eligible for free hours or tax free childcare.

You are missing the point - excluding higher earning parents from childcare support is creating some huge incentives for them to behave in a way which reduces tax take and is negative for the economy. That is not good tax policy.