Tories campaigning to remove the childcare maximum income threshold

[FlakyPastries]

Kemi Badenoch has announced that the Tories want to remove the upper income threshold on childcare.

This means all working families will be able to claim it, including those earning over £100k.

Do you agree with this policy?

My baby’s nursery charges £30,000 and the free hours and tax free childcare is worth around £15,000 - so this is quite a significant benefit for those currently unable to claim.

To give an example, I received the free hours, so the government paid for that. I was part time and salary sacrificed to ensure I didn't go over the threshold. They lost tax revenue and my spending in the economy for several years because of this threshold. Removing the threshold in my case would have generated money for HMRC, it would not have been a cost at all.
I believe I have read estimates that net it would only cost 300mill because of the extra tax that would be generated. Its entirely possible its would make money, because it creates behavioural change they cant accurately predict the cost/income generated by the removal of the threshold.
If I hadn't salary sacrificed for one year of the time I received childcare support I would have paid £18k more tax that year (at 62%) ! I will not be alone.

It is not about giving free childcare and handing out cookies. It is about providing the right incentives for economic growth for all and maximising tax take. So is the inheritance tax thing. If it makes more sense and raises far more money charging everyone 10per cent then the rich opting out, then that raises more money. If more people work etc and longer hours then that raises more money for all. We should not be having a tax system or any type of system that basically encourages everyone to game the system and navigate the system, rather than just live and go out and work to the best of your ability.

With introduction on IHT on unused pension pots it's estimated that over 10% will pay IHT. This mostly impacts London and SE with very high property prices.

Truly rich people don't pay IHT at all - remember young Duke of Grosvenor inherited 9bn and paid fat 0?

It's middle classes which are caught. UK IHT is the 2nd highest in the world and it does drive wealth out of the country, just google a bit.

It would be much more effective and bring more tax to HMRC to abolish nil band and introduce 10% flat rate across all estates. It's small enough to make any estate planning effort but with much wider base the amount would be significant. Plus wealthier people wouldn't bother to leave UK.

But everyone would need to contribute in this case, not just those "richer than me", so "how is this fair"

I mean it is the same with the national care, the idea is for the NHS to be able to actually survive long term. And for their be a path to discharge to easily and for care workers to be a real career. Same with nursery workers, if you professionalise it including with early years teachers in every setting it will make a huge difference to that generation long term and you will be able to get social services and NHS involvement for all kids much earlier and avoid as many NEETs etc and deal with special needs far earlier.

Why though? Why do you think everyone votes based on their own circumstances not what’s best for wider society? Not everyone is so shallow!

I mean anyone who actually wants social mobility will definitely want a nationalised nursery and early years setting over and above national care even, as that is arguably again benefitting the richest demographic on an asset basis in society.

Yes it’s about behaviour you want to incentivise. And high earning women who stay at work after dc is better for everyone. They pay high taxes while doing that.

With introduction on IHT on unused pension pots it's estimated that over 10% will pay IHT.

The answer’s simple. Just use your pension for its intended purpose and spend it. No tax has been paid on it on the way in, it’s only fair that it’s taxed when it’s cashed in. Have a brilliant retirement or give it away when you have some confidence you’ll live for another seven years. There are very easy ways to mitigate it.

I would be happy to introduce IHT on all estates. I still think the larger estates should pay a higher proportion though. The recipients of the inheritance haven't done anything to deserve it.

I mean I really don’t see the difference between Kemi going on about childcare as a professional working women with young kids and all the issues there (as in, making it personal) vs Burnham going on about his father’s care. It is the same concept. The arguments for nationalisation at both ends are the same in that it saves costs elsewhere.

“I would be happy to introduce IHT on all estates. I still think the larger estates should pay a higher proportion though. The recipients of the inheritance haven't done anything to deserve it.”

You could tax recipients as well? Like 10 per cent. Although I bet they won’t be able to organise that properly as so many people don’t seem able to fill in a basic tax form in this country.

Yes it’s good to have a successful woman as a leader of a party.

Also the French tax inter vivos gifts.
It shouldn’t be the case that giving away X years before results in no tax and then BOOM 40%. It is just another oddity/threshold of the system. The entire system is way too complex now and random.

We already tax recipients of estates above the IHT threshold. Most people seem to manage probate forms or find a solicitor to do it.

I think it’s convenient that they want to change it just as MPs are about to hit the 100k salary mark

No you charge the estate as a whole. Not the recipients.

In fact, 1 child can inherit up to a million. But if you have 3 million leaving it to 5 children, they are taxed at 40%. So it is not fair at all anyway.

It amounts to the same thing. That’s just semantics.

@blossomtoes - I illustrated exactly why it is not the same thing at all. Do you have 1 child?

There used to be a tapering of IHT. Eg survive 5 years after giving the cash and IHT is a lot less than the full 40%.

But it’s hard to tell how long you are going to live for. And the ability to hand over any reside was one of the few benefits of a DC pension. It’s crap having a DC pension while paying tax to pay for lavishly more generous public sector DB pensions.

Yes, it’s crap taking the tax free benefit on the way in and having to pay tax on the money on the way out. You can still hand it over tax free, you just have to do it when you have the expectation of staying alive for the next seven years. You want it all ways.

DB pensions were stopped a while ago. Of course older people may still get a DB pension from older contributions.

Most public sector pensions are still defined benefit. The vast majority of private sector pensions are DC as private sector has to act with financial responsibility.

@Gtfto2024

Those earning over the national average, should not need to be subsidised by taxpayers at all.

So can I assume you'd be happy for means testing to apply to ALL benefits then. I.e. no state pension nor disability benefits nor free prescriptions nor child benefit, etc., for anyone with income higher than national average.