Needing to reduce income to get free childcare

[Katie1186]

Hi all,

I earn over the £100k threshold and actually would be better off if I contributed £10k into my pension to qualify for the 30 hours of child care.

Has anyone done this where you have manually contributed after being paid or do I need my employer to do this in order to reduce my income??

I know people who have had their employers do it but I don't know anyone who has had to manually do this themselves.

Thank you so much in advance!!

Yes, you can increase your pension from your 100k salary to get free support from the government.

Meanwhile, disabled people dependent on carers can no longer afford essential help and aids because the government can't afford the massive amounts of benefits being claimed and are stripping it from people who have no choice and genuinely need it. Shame they aren't morally tested instead of just means-tested.

⬆️ 100%

Ouch. But true.

110%. It is people like op playing the system that are screwing those that actually need it over. Pay for it yourself op out of your huge wage...
We have a similar family next door, they are all scroungers and milking the government for every benefit going. One is working under the threshold to get benefits/wrap around care and meals, another is claiming for a physical impairment she doesn't have. They're all on every benefit going when there are genuine people who are actually struggling who need it, and are probably having to jump through hoops.

@overtothere nailed it. First post

If she’s putting £10k into her pension to bring her income down to under £100k, we can assume she earns about £110k, so that’s less than 10% of her salary going into a pension. I’m more surprised she wasn’t doing this already as a matter of course, ignoring any childcare benefits. I earn much less and put in 8% (in order to get my employer to put in 12%). Putting less than 10% of a high salary into a pension is hardly playing the system, it’s what a lot of sensible people would do anyway.

It's not playing the system, it's just sensible. Op will be paying an awful lot in tax every month on that salary too.

She is trying to get free childcare though, hence this whole thread. It is unscrupulous.

Playing people against each other is so unhelpful. It’s not a race to the bottom! People who earn over 100k pay 50% of the income tax in this country!! Having small children and a demanding job is hard work, why put OP down?

How is what OP wants to do any different than women having kids they can’t afford, with their plan being to claim as much as possible via benefits and housing? For years and years on end.

At least she’s a taxpayer.

When is Farage next campaigning?

I think people are being hard on OP. As a higher earner sh is paying her way. She is not doing anything illegal like the person mentioned by another poster claiming for disability they don't have. A lot of people paying higher tax need a bit of help with childcare to enable them to work. It won't be for long, just until DC goes to school. It's wise to pay as much as you can into pension anyway even without needing help with childcare.

And the gov could change this rule very easily. But they don’t, because they want people to pay into their pensions so they incentivise it in various ways.

What has Farage got to do with this? I don't see a link? Please enlighten me.

I agree, probably a journalist. If it really is true and you're earning 100k, than I would assume you'd have the intelligence to not have to create this thread?

It’s not.

OP is doing what’s best for her family like many others.

Why should OP work full time earning a good wage and take home less after tax and childcare than someone on 20k less than her because they can avail of the funded childcare?

100k is a cliff edge that some people are too obtuse to want to recognise.
Its the only tax cliff edge that actually leaves you worse off if you have kids.

The tax and benefit system should make economic sense and incentivise people to work rather than relying on people, who at the end of the day are self-interested economic actors, to make "morally" right choices.

It's the 100K cliff edge in the taxation system that is at fault here. If it were tapered, there wouldn't be this problem. Between 100k and 125k people with two children have over 100% marginal rate of taxation. They have to pay to work. They'd have to be mad not to try to avoid that situation.

Lambasting someone paying 40K in tax a year is ridiculous when we need as many economically active people as possible to pay the every increasing cost of government spending.

15hrs at my dds nursery would cost me £360 a month. Even if yours is more expensive I’m sure you can find £500 in your 8k+ monthly budget (more if you are a two income family) you could potentially have a joint income of 17k a month and your quibbling over paying childcare for the children you chose to have. It’s disgraceful.

I suppose it is a loophole and the current cliff edge thresholds are counter productive

I wonder if people view this the same way as people/corporates using loopholes in tax legislation to avoid tax.

or is there different morality applied to using different loopholes

(I think loopholes are a failure of legislative writing and need more attention from government/civil service rather than castigating those who use them tbh)

You pay tax while working and then you'll pay tax when you get your pension so I don't see an issue with this. Also if you have a good pension you'll be able to afford care if you need it later on therefore saving more money.

Do it op

Yes, agree. We don't know if op has a partner/spouse who earns as well? There isn't much context is there. Again, if you earn so much, why the need for the thread? Assuming, op would be able go work it out?

Perhaps don’t lecture someone about their finances when you have the tax understanding of a potato.

The take home on 105k with a student loan and a very basic pension of 5% is just over 5k. How does that give OP an £8k monthly budget?

There’s a lot of ignorance in this thread. Someone on 99k with a child, would have to earn £126k to be in the exact same position as being on £99k due to the loss of childcare and 60% marginal tax rate. Why should someone be penalised severely for getting a 1% pay rise? Unless everyone just wants a Communist society where everyone just gets paid a flat £35k a year and there’s no incentive to better yourself.

The people who think your average 100k earner has a financial advisor on hand are laughable.