AIBU to hope the £100k cliff edge for funded nursery hours is removed?

[horchatatresleches]

News is that the education secretary is looking at nursery funding but it’s unclear if it’s to reduce or increase the support available at either the upper or lower thresholds. AIBU to hope that the harsh cliff edge which stops all nursery funding at £100k is removed or least replaced with something tapered so that people aren’t losing money for being marginally above the threshold?

Government gets:
Corporation Tax – 19% to 25%
Income Tax (owners / sole traders) – 20%, 40%, 45%
Employer National Insurance Contributions (NICs) – 13.8%
Employee National Insurance Contributions (NICs) – 8% and 2%
PAYE Income Tax (employees) – 20%, 40%, 45%
Value Added Tax (VAT) – 0% (childcare), 20% (standard rate items)
Business Rates – approximately 49% to 55% (of rateable value)
Dividend Tax – 8.75%, 33.75%, 39.35%
Capital Gains Tax – 10% or 20%
Stamp Duty – 0% to 12%
Apprenticeship Levy – 0.5%
Energy (VAT on gas and electricity) – 20%

So I do! But successive governments have been addicted to the sneaky stealth tax of freezing thresholds because the masses don't really appreciate how this works. An increase to the headline rate of income tax would be front page news and spark a potential electoral bloodbath. But doing the fair and proportionate thing would start the usual uneducated and simplistic cries of "tax breaks for the rich" stuff.

The country and labour in particular are addicted to a bloated welfare state and milk the middle classes to pay for it.

Grandmothers and eggs. The government still doesn’t get your nursery costs, the provider does. That’s like saying the government gets the money you pay Tesco for your groceries or the money you spend on your haircut.

It gets a huge cut. Paid for by parents, well parents who work.

And from the proceeds of every other business. Paid for by people who work, pensioners, people who are economically inactive, everyone who ever purchases any product or service.

Yep.

It’s £5000 a month after tax , two kids at full time nursery in London is£4000 a month, imagine if she has a three year old and one year old twins, she would be better off on benefits then working ( if a single mum).
The sad thing is that most of these high earning jobs don’t allow part time so she couldn’t just drop a day.

PLUS - if there is a couple both earning 99k they can have nearly 200k income and still keep the state funded hours - that’s totally unfair to single parents or single earning families.

im a single mum and I work part time to spend time with my child but also as the two more days a week I would need to work would be swallowed up by nursery fees paid after the higher rate tax - totally pointless (luckily my industry supports part time work).

So you are in favour of the nationalisation of nurseries and pre school education and childcare.

Excellent. I'm with that. Proper socialist where everyone gets it without question regardless of income because everyone is equal.

Fab.

Otherwise may be we can just pay for childcare in one way rather than having two systems which are grossly unfair and have a damaging effect on the economy and society as a whole.

But no we are just interested in headline grabbing "we must punish 'the rich'" / "we can't allow 'the rich' to get anything for free". Failing to understand that the taxation system which is the burden of those who are better off, is what pays for everyone.

The financial illiteracy in this country is absolutely shocking.

So you are in favour of the nationalisation of nurseries and pre school education and childcare.

How do you manage to extrapolate that from my pointing out that the government doesn’t get nursery fees? This place is properly bonkers sometimes.

Exactly, it only gets around 35% of nursery fees.

It does seem a counter productive measure. I am an example - I earned 100k just before I had children, over a decade ago. I am not expecting sympathy, but I have made what I thought were rational decisions due to policies like this and the result is:

I took longer mat leaves than planned, bringing my income down for that year

Large pension contributions

Have only worked 4 days/week since

Buy extra holiday/take unpaid

Bought a smaller house than planned, as I moved when children were small (not an unusual time to move id have thought?) and my nursery bill at the time was 3k/mth lowering the mortgage I could comfortably get.

The house part I think is important as , definitely for me anyway, part of the lure of the high earning life was the lifestyle - when I couldn't get what I'd envisioned it made the whole thing seem less worth it.

Anyway now ultimately I am in my mid 40s and plan to retire at 50, helped by my hefty pension contributions.

So rather than the high flying life my 20-something self saw, going for the top jobs and working into my 60s earning a high level full time wage and being taxed on same - I will spend 2 decades working at 50i-60ish% of my total possible wage (which was lower anyway due to not pushing career), and my total lifetime tax will be substantially lower

Same @DryIce - but can’t retire that early as have 4 DC and uni fees support and as their futures seem uncertain in this climate will keep working. But there is no way I want my pension taxed at a huge rate when I die as well, so will see how it goes. There is no point pushing out once career and sacrificing time with one’s own family for the benefit of others to do just that.

I think you are overestimating the monthly difference between yourself on £49k and someone on £101k.

With minimal 5% pension contributions, you would be on just over £3k. on £101k its £5.5k. However, if you add in unfunded childcare at up to £2k (which it can be for just one kid) per month, thats almost the same take home. This is a very basic calculation, there are obviously many nuances to consider, like the fact the higher earner also doesn't get child benefit, the funded hours aren't full time and term time only, but the take home pay after childcare isn't so drastically different for over double the salary

I think many people don't realise the take home pay on £100k +.
They assume it's double the take home for someone who earns £50k

It's hilarious if it wasn't so depressing.

I think we are all tired of paying for other people and need to access the same benefits that we fund for everyone else, or there's no point in it all.

As I stated earlier, I CBA doing waiting list initiatives and come out of it no better off. Instead I'll have an extra few weeks unpaid with my kids this summer.

And it's absolutely worth adding on the cost of child benefit when working out how hard done by higher earners are in this ridiculous society.

Yet another benefit that we fund for others but can't access ourselves.

Public services should be accessible to all the public, not just those who earn under £50 k

I think I'd accept the lack of funding for childcare to a greater degree if it weren't for paying tax at 45% and losing the personal allowance. Tax policy is basically a big FU to anyone who has some degree of success, to keep them down as much as possible. Then when you think they've shafted you enough, they slam on VAT to school fees.

Yes this is very true, I haven't got to the uni years yet!! 50 is my year for optionality, when I have the choice - I may decide to keep working, but on a lower level or even more part time. And yes to the pension, I've stopped contributing quite so much now it will basically take care of itself, and am looking at other savings vehicles

I do not think the Government will ever listen and will keep screwing those over -who they think they can -to balance the books, so the only thing to do, is to adjust one’s behaviour to look out for one’s one family and one’s own future. I think being financially savvy and investing wisely from the start, even for the kids via Junior ISAs to pay for their uni and their housing deposits or a contribution there, makes a huge difference long term. And one can work part time and use the spare time to plan successfully and in a way that balances the quality time we have on this earth vs money earned. We realised that one of us planning carefully and minimising spending was saving more money than stressed out of our minds both working the equivalent of more than 140% normal hours (9-5 5 days a week being normal) and then just spending for the sake of it to “make” up. A lot of other European countries have more of a balance across society. Here they keep talking about wage inequality but nobody mentions hours put in inequality! There are couples cooking up 120 hours between them a week and others doing 32.

Why would any government put the interests of the wealthiest 6% of the population ahead of the rest? It wouldn’t exactly be a recipe for electoral success.

Must say, I doubt PAYE earners who earn 100k and are young enough to need preschool childcare are the wealthiest 6% of the population. Their parents or grandparents perhaps! But there's a difference between income and wealth, which matters because our increasing separation of the two is a big part of the problem.

In this case the interests align, though.

Surely we want higher earners to be paying as much tax as possible? The tax take is higher from someone paying tax on the full amount of earnings than someone who cuts hours / makes pension contributions to keep themselves under the cap.

Also, do you think it’s fair that a single parent on £100k should be worse off in terms of childcare than a couple on £198k? Because that’s quite possible under the current system.

It wouldn't be putting their interests ahead, just not penalising them.

Where would you draw the line though? Should multi millionaires get child benefit? If not there has to be a cut off point somewhere.

It would be quite amusing if CB were universal though as we are a low income household who receive no help apart from CB for one child so it would be fun to point out to those who talk about all the benefits low earners receive that they actually receive the same as us or even more if they have multiple children!

Fwiw I do think the £100k cut off is a bad idea and would like to see the threshold for funded hours raised to help out more workers.

It's not so long ago that child benefit was universal! Only changed in 2013, under the coalition, and then the threshold got left where it was for 11 years.

That was becoming a ridiculous bottleneck too, DH got a pay rise in autumn 2023 and would've dropped half a day had the Tories not enacted one of their saner policies on the way out and increased the threshold a few months later.