Tax deductable childcare for all working parents

[eleusis]

I think the income which one spends on childcare in order to go to work ought to be tax free. So, if I earn £35,000 and spend £12,500 paying my nanny, childminder, or nursery fees, then I should pay income tax on £22,500 that year.

Do you agree?

uwila stop it

25k is a lot of money to some poeple and you know it

god m&s sound great will check them out

ssd, the people round here who work for M&S have said they are v good. They do flexible working too.

you'll also get an annual bonus each year, assuming the company keeps doing as well as it has been..between 5 and 20% of your annual salary (depending on your role)

ok so 2 parents who work have a combined income of £35k - £17.5k each.

They currently each earn (approx) £13.5k (net) after tax and NI (about 2.5k tax)

They pay £12.5 in childcare costs - £6.25k each so deduct that from each of their salaries and they get taxed on £11.25k so earn £9.5 each PLUS the £6.25k they don't get taxed on - £15.5k EACH - which takes their combined NET income to £30k.....more than they currently get paying tax on £17,5 each.

So they're better off............by £3k

will check them out

ta!

and a single parent on £35k a year earns £25.5k a year (NET).

deduct the £12.5 from the £35k and they get taxed on £22.5k - earning then £17k PLUS the £12.5k they haven't been taxed on they have a nice net income of £29.5k.........

uwila if I worked full time we would be pretty much in that position - earning 35K ish each. And we can afford our childcare (even though DH doesn't have a voucher scheme) and bills and that is with me only working part time and so having the pro-rata drop in income. And we afford a second car (DH has company car), two weeks hols in France and a short break at half term. We do have to be fairly stringent in managing our money but we do OK. But obviously if my childcare cost less than my mortgage (it doesn't currenly and for only 3 days/week) I would be very happy.

Fannyannie, you seem to be completely igoring the actual childcare costs that they pay

they don't have a "nice net income of £29.5K" as in order to earn the £35K to start with they have to pay £12.5k for childcare so in your example their disposable income is £17K

disposible income of 17K after chilcare costs

luxury

well I don't see what's wrong with £17k to live on.........it's better than the £15k they would currently be getting - and a whole lot more than a VERY large % of people in this country get.......

£1400 a month for mortgage/rent, utilites and food is pretty reasonable if you ask me!

yep i could manage on that easy fannyannie

ok admittedly we "need" about £22-24k a year (at the moment) to survive and pay the bills - but then we did wrack up debts of £30k when we tried to set up the business in 2005.....once most of those debts are cleared (in 3/4yrs time) we would VERY comfortably live on £17k

Where do you live fannieannie?

I don't see where I live has to do with it - we're already factoring OUT childcare costs and our mortgage is just under £700 a month - still leaves £700 a month for utilities and food - easily doable.

And yes - even in London there are people earning MUCH Less than £17k a year and surviving quite happily

Because I don't thinkit's it's possible to live on that in greater London. And if it is, I'd like to know where.

If I sent my two kids to a childminder it would cost roughly £3000 per month. I could rent a 3 bed house for less than say £1000. Groceries and utilities would cost another say £600 per month. Car expenses another say £200. Kids clothes about £50. We are up to £4800 already, and that's £57000 something.

So where can you live on £17000?

Our utilities for 2 kids and 2 adults are approx £170 a month - groceries for the 4 of us about £250-300. Clothes - as an when they need them definitely NOT £50 a month?!?!?.

I'm sure that all those people earning the minimum wage, and living in Greater London could eaisly tell you how to survive on MUCH less than the figures you seem to think are hardly manageable - you know those that work 40hrs a week and bring home a dispoable ANNUAL income of around £10k...........

O.K. I've been away to do your sums Fannyannie.

Couple earning £35,000 combined (assume £17,500 each) with childcare costs £12,500. - Net Disposable Income WITHOUT tax relief for childcare = £14,791.

Same couple , same earnings - no childcare costs Net Disposable Income = £27,291

Allowing the first couple tax (and National Insurance) relief for their childcare costs (without which, please remember, they could not earn the £35,000 to start with) would give them a Net Disposable Income of £18,916.

Still £8,375 short of the net disposable income of the couple with jobs that enable them to share the childcare by working shifts.

Tell me again that it wouldn't be fair that the couple who don't need childcare pay less tax than the couple who need the childcare. They're already £12,500 financially better off than them and you resent the possibility of that gap being closed to only £8,375 better off than them.

Ooops obviously I mean "that the couple who do need childcare pay less tax, not the couple who don't".

Obviously all the sums exclude tax credits, just basic salary/tax deductions and childcare cost comparisons.

Couldn't agree more uwila. Wahay - someone else finally agrees with me on this point.

The debate seems unfortunately to have descended into an argument that because someone earns more than you then they are rich.

It is about making work pay and making it worthwhile. It is about questioning why we have some of the highest effective childcare costs in Europe.

I will get tax-free childcare because my children attend an on-site nursery at my place of work. I have to do a salary sacrifice to get it.

It is not means tested or restricted to people on low incomes. Why should it be????

The government has deliberately introduced this tax 'loophole'. But why should it be restricted to people with an on-site nursery?

please read my post of 13.02..........

And put yourself in my shoes........the thought of working quite possibly 2x as many hrs as someone else for the same amount of pay - and then being forced to pay MORE tax - because my and DH's happen to allow joint childcare responsbilities doesn't exactly sit nicely - I slog my guts out and get hmmmmmm lets see NOTHING - they work less and get LOTS of extra help.....

Who is "they"? How many hours do you work.

This name change thing is going spectacularly badly.