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.

TBF these mothers would probably have enough money to fund multiple children themselves if they weren’t giving 40% of their income to the state?

I agree. I think also that universal benefits buy in goodwill from the people that're paying huge amounts of income tax. It’s a few short years of giving them the free childcare. I know there is huge resentment against paying tens of thousands of tax but being entitled to nothing. It makes people feel not invested and not part of society. And once people drop down days at work etc, or drop out of the workforce altogether, it’s hard to get them back. So we lose that future tax forever

And also the nursery bills would be hundreds lower a month. A lot of nurseries hiked up the fees to cover the free hours shortfall. It’s like the care homes, where the self funders pay lots more to cover those paid for by the government

On the other end there are swathes of people who effectively pay no tax at all and are completely uninvested in the state running efficiently. More taxes and a profligate state is fine because they are not contributing. It’s infantilising.

They’re giving the state 40% of their income over £50k just like everyone else. Are you seriously suggesting they should pay less tax than the rest of us?

Yes it's not 40% of all their income. Only above £50k. Which for someone warning £10000 makes it 31% of all income. And at this level of income it is much less than 31% as people use pension contributions and other means to reduce tax anyway.

They may well be paying 40% of their income in tax and NI, if they have a high income.

You variously pay rates of 45-60% plus NI over £100k.

Where did I say they should pay less tax than other people?

My point was in response to the PP saying that higher earning women are reporting they are having less children because of high childcare costs. They are both excluded from state childcare funding and pay very high taxes.

If they weren’t paying such high taxes (to fund other people’s childcare), they might feel able to afford it directly from their income.

Wow ok you seem fun 😆
The global shortage of airline captains was created in the pandemic. Here in the UK, the 100k cliff edge results in many experienced captains working part time. I know this first hand.

Well not quite. The personal allowance tapers away from £100,000 so someone earning £125,000 has no £12,570 personal tax free allowance. Over £125,000 they pay 45%.

This is only correct up to 100k.

Between 100k - 125k the effective tax rate is 60% in England and 65% in Scotland due to the loss of personal allowance. They also lose childcare. So what's the point of working for that 25k?

Still not 40% of their income, is it?

Oh I'm an absolute delight.

People should take responsibility for poor decisions they made though. It wasn't the pandemic, it was poor decisions made in response due to short term thinking.

Bad management.

You sound very defensive of this.

I know our company gives access to an accountant as a benefit. I wasn’t actually aware of the tax trap at £100k until I got there and he did projections (my parents were working class). And then we were advised about salary sacrifice etc. I think a lot of people are salary sacrificing. It’s something like you need to earn over £150k before you see a penny of the extra income over and above £99.5k if you lose personal allowance and have children in childcare

Really? No universal credit- poor decision. No child tax credit- poor decision. No pension credit- poor decision. Etc.

It’s not far off @blossom.Earn £125k, gross £10.5k, net £6.5k a month

We only get 20% off our wraparound and holiday childcare with the HMRC tax free childcare scheme but people claiming UC get more of a % back which I feel is a bit unfair. Some people are just above the threshold for UC and then are substantially worse off.

2.1% of people in the UK earn over £150,000. It really is the richest.

People would need to be earning a heck of a lot more than 100k to be handing over 40% of their income to the state, assuming that they're maximising pension contributions etc. It's a tiny proportion of the population.

That is so they can afford to work. I am old and before childcare costs were introduced, including UC help, it was common for Single parents not to work as they literally could not afford to. Once they hadn't worked for a good few years getting back into work was very difficult. So there were plenty of single parents who never worked after having children.
Paying for childcare for lowest earners actually saves the government money in the long run by keeping people in work.

‘Assuming maximising pension contributions’.

This in itself is a confusing part of the issue though - why is it expected that everyone earning £100k+ should be maxing out their pension contributions?

It is very strange - the only reason is the very high taxation over that £25k of income.

Why has it been set up like that? The answer to everything can’t be ‘put more in your pension’.

I recall meeting with senior NHS trust directors shortly after the £100k cliff edge came in. They said that the introduction of that, coupled with the then restrictions on pension savings, had led to a huge number of consultants dropping to 3/4 days a week because the economics of working full time didn’t add up for them. They were worried about how to staff operating theatres as a result.

You can argue all you like about airline captains and the pandemic but there is ample evidence that the £100k cliff edge has had a harmful impact on the economy.

Tbh, I’m not even sure what you’re arguing now. Are you on the right thread?

That’s a workforce planning issue too. Surely the NHS has worked out how to mitigate that by recruiting surgeons to make up the shortfall. If not what has it been doing for 16 years?

How many of that tiny % have pre school age children? How much does everyone think removal of this threshold would actually cost?

And I mean net cost.. after considering that we are already funding childcare for lots of these people- as they are actively doing all they can to stay under the threshold. Why not just allow them to go over the threshold and be able to tax their income. Arguing this is totally bonkers

It’s a net positive at all income levels. So let’s quit penalising thoose at the higher end of the income distribution. It’s self defeating.