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.

@FlakyPastries it doesn't. It just recognises that redistribution makes more sense to me.
I.e Parent of young child uses time to parent. Job available for 4 to 5 years for someone else.

Note this applies for male and female. At present going 50 50 SAHP makes more sense from a tax perspective.

I expect to be told to return to the 1950s. But I do think modern life means we miss out on a lot of time with our children.

Working part time is a tax avoidance scheme dreamt up by clever financial advisors only the wealthy have access to?

I'm not talking about people on £100k

I was responding specifically to @FlakyPastries comment about women paying 40% of their income to the state.

To fall into this bracket, you would need to earn at least £168k and pay nothing into a pension. Most people pay into a pension, so the actual earning threshold would be much higher for most people. Around £330k if you maximise pension contributions.

These are not the people who are hesitating whether to reduce their hours to get a bit of free childcare.

I'm not saying that those people don't exist, and I've said on MN previously that I don't think the cliff edge at £100k is fair. But the people hovering around £100k are not the ones that I was talking about.

Okay but we are talking about the £100k cliff edge here, for taxation and childcare.

By the way I pay tax of 40%, and it’s much much lower than that threshold you mention, it’s not so vanishingly small a number of people

Absolutely. It's close to impossible to fill a skilled IT role in 100k+ bracket

I find it really weird why people behave as though a political party is a consistent entity. ie the Tories did X (with different PM and cabinet) so lets blame the current lot. It happens the other way too with other parties. Yet anyone with an ounce of sense must realise that parties can change a lot- Blair's Labour was nothing like Wilson's Labour or Corbyns' Labour. Parties can also change very fast Thatcher's Conservative Party was very far removed from Edward Heath's Conservatives and that happened very quickly.

There are good arguments for and against this decision but going on about the last lot is really pointless. On balance I think it is good and might help grow the ecomony and increase tax receipts. I won't benefit - never earn anything like that - but I can see the cap is wrong really.

And if people think it’s not a good idea why keep it anyway.

It’s tax avoidance in this instance. Don’t be coy, just admit it.

Tax avoidance is using illegal schemes, often overseas, to avoid paying tax which is legally owed. No regulated financial advisor would touch these schemes.

Tax efficiency is using the tax allowances that the government have made in order to maximise your take home income and plan for the future. This uses vehicles that the government create in order to legally reduce your tax payments. Yes, the system is complicated so an advisor may be needed for some people to fully understand the options, but the information is readily available for anyone to access. However, you need enough disposable income after your living costs, to be able to use the options available which is the limiting factor for most people.

If you have an issue with tax efficiency, you need to campaign to the government to cancel things like pensions, ISA's, CGT allowances, dividend allowances, etc, along with options to work part time (which in the cases mentioned regarding childcare thresholds is the method many use to be more tax efficient).

If you can't afford children, don't have them.

That’s a bit tricky for people who are economically inactive. Is that more tax avoidance ;

We really don't want to get to the stage where only unemployed/benefit claimants/low wage earners have children!

It isn't. From the horses mouth...

"Tax avoidance is bending the rules of the tax system to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no purpose other than to produce a tax advantage.

Tax avoidance is not the same as tax planning. Tax planning involves using tax reliefs for the purpose for which they were intended. For example, claiming tax relief on capital investment, saving in a tax-exempt ISA or saving for retirement by making contributions to a pension scheme are all legitimate forms of tax planning. While such actions may reduce the total amount of tax paid, they are not tax avoidance, because they involve using tax reliefs in the way that Parliament intended when it passed the relevant legislation."

www.gov.uk/hmrc-internal-manuals/avoidance-handling-process/ahp1300

Ah, I'm not going to buy into the benefits bashing I'm afraid. That's icky.

I believe that, regardless of your income, you need to weigh up whether you can afford to have a child. Childcare costs are not hidden.

Quite a lot of economically inactive people pay tax, especially those who retire early. And that’s pure semantics @Badbadbunny. Stuffing your pension is the definition of bending the rules of the tax system to gain a tax advantage that Parliament never intended.

It’s a silly turn for the thread anyway. The point is the tax policy is impacting behaviour and tax receipts which is why the op started the thread saying she’s glad it’s changing.

Rather, good if it changed.

Yes, we need to get Kemi in to number 10 first. By which time my boy will be in school and I wont benefit. Fingers crossed she might even remove the VAT on school fees that was so vindictively brought in by those class warriors in government now.

Won't somebody think of the wealthy.

Honestly it’s shocking isn’t it? Someone I know on UC gets free holiday clubs for her kids (3 of them) ALL summer. It would cost me £800 a month per child to send them to the same club, and I would HAVE to send them some weeks for childcare because I work FT. She sent them the entirety of the 6 week holidays which I found just shocking and quite frankly sad for the kids, whilst she sat at home and slept and got her nails done. Same applies for school dinners, why do children whose parents can’t be bothered to work get these and I, who work full time would not be able to afford them for mine? The system is just an absolute joke and I wish I could afford to leave this country asap.

Well then, surely no one on benefits should have a child? Because how are they supporting them, let alone more than 1! Your comment is incredibly contradictory.

If. You. Can't. Afford. A. Child. Don't. Have. One.

When I was a young adult the cultural message was don't wait until you can afford a child as you will never have one.
Past generations just had a child anyway

Which is why I, and many like me, grew up in poverty. We don't have to do what past generations did.