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?

That should have said that everyone with one child of nursery age. Sorry I thought I’d typed that, and the context would be obvious regardless. And if it’s such a small amount of workers, why not extend the benefit? I don’t think that people reducing their ANI to >£100k so as not to lose funded nursery hours are trying to reduce their tax take. They’re trying not to be tens of thousands worse off. I can’t speak for everyone but I’m happy to pay tax. And I don’t think those whose focus is paying as little tax as possible are those on £100-125k PAYE salaries. Other people on this thread have showed what a significant percentage of income tax is paid by higher earners.

Other people on this thread have showed what a significant percentage of income tax is paid by higher earners

Indeed, illustrating that everyone who earns a high salary isn’t trying to minimise the tax they pay. This seems to be an issue for the small subset of the 6% of the population who earn more than £100k and have children under school age. Statistically those people amount to a rounding error.

Yeah it's got to be huge, everyone we know who was in that bracket did it and I remember conversations in the playground of nursery about it! Along the lines of person A "I've just lost my funded hours because of my promotion" person B "have you upped your pension contributions to take you under the limit" sort of thing.

It’s really not an insane salary. It’s more than average: sure: but a huge amount of it is paid away in tax. Why the hell should they pay into the system and get nothing back.

For a parent living in London and paying childcare; they certainly will not be wealthy

Politics of envy in this country is awful: we need higher tax payers to subsidise everyone else.

They don’t because people earning > £100k pay around 50% of all income tax.

So any behaviour change by this group to decrease tax paid has a significant impact.

Around 3% of nursery aged children have parents earning this amount.

According to the ONS

• The highest-earning employees are concentrated in the managerial and professional occupations, aged between 40 and 49 years, or work in the information and communication, and finance and insurance service industries.

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/lowandhighpayuk/2024

I know a few people are having children in their 40s but the vast majority aren’t.

Why should they pay for everyone else’s childcare via the high rate of taxes; yet get no help with theirs

a) There’s a difference between wanting to minimise the tax you pay and accepting being actually worse off after a pay rise than you were before it

b) if it’s just a rounding error, what’s the issue in extending the provision anyway?

Because all of us pay for things we don’t benefit from. Why should childless people pay for other people’s childcare and education? Why should healthy people pay for other people’s healthcare? It’s how society works.

If you have kids in nursery, by taking a pay rise that takes you over £100k you are paying the government to be allowed to take that pay rise. In taking that pay rise you are reducing your disposable income. Surely no one earning over £100k is THAT stupid???

Here is an interesting article. @BIossomtoes the research here suggests removing the cliff edge might even be directly beneficial to the treasury.

https://www.ajbell.co.uk/group/news/scrapping-ps100000-childcare-cliff-edge-could-raise-over-ps130m

It’s not needing government “help” . It’s getting to use some of the resources they have contributed to .

remember, the “government” doesn’t give anyone anything. It is the taxpayers who pay for everything

This article points out that a person with 2 children in nursery would need to earn £156,000 to reach the same take-home as someone earning £99,000.

Now that's madness however you frame it.

this is like saying that I’m not subsidising the fire brigade going to the house of a rich person as they could pay for their own fire brigade.

i wonder how many benefits you are receiving out of interest

Higher earners are likely to have children later in life. It’s only one data point but my husband was the youngest dad to be in our NCT group and he was 35. Every other dad there, and over half of the mums will be 40 at some point while their first is nursery age. And if we have a second, we’ll be in that group too. And that’s backed up by data, in the 2024 ONS stats the biggest increase in births for mothers ages 35-39 - who mostly will have a nursery aged child in their 40s - and fathers saw similar increases in older age groups.

https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/livebirths/bulletins/birthsummarytablesenglandandwales/2024#parental-ages

Could is doing a lot of heavy lifting there. And it’s £130 million over four years. Not nothing but not enough to change much.

How can you think that when presented with research showing a cost neutral or even benefit to the treasury other than to ideologically penalise? Is that a jealousy thing or what?

Do you not even think this stimulates further research? Or another look?

It isn’t like saying that at all. Can you argue that we don’t all pay for things that don’t benefit us? Seriously?

I wish I could say none but in the interests of transparency I’m now receiving my state pension. Prior to that I was a tax payer for 46 years, 20 of them at the higher rate so it’s not quite the gotcha you thought. Obviously I’m still a taxpayer as every single penny of my occupational pension is taxed.

But if the childless had children they’d benefit from childcare and education. There’s a difference between not benefiting from a service because you don’t use it, and not benefiting because you’re excluded for your salary (which pays for the service for everyone else and leaves you significantly worse off for working more). And I’d argue that children’s education is a benefit to the childless because an educated population benefits everyone, but maybe that’s just me.

Another thing to point out about this research is that it is being written about by AJ Bell, one of the UK's largest pension providers. If employees out there want to make a pension contribution to avoid the 60% tax trap and the childcare cliff edge, a large chunk of that will be heading to their platform and their SIPPs. They have a vested interest in the perverse situation we have now.

Isn't it just?

Especially the denial part of it. Just bloody own it if you are going to do it.

No you are not paying tax on every single penny. You have your personal tax free allowance no doubt.
That's not taxed.

Unlike the earner on £125k who has lost all personal tax free allowance. Now they are paying tax on every single penny.