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!!

At least OP is working full time and paying her fair share of tax. Why should only the scroungers refusing to work more than 16 hours because they know they'll lose their benefits benefit ?

Exactly. I earn about £120k and after taxes and max pension, even without student loans it’s well under 6k take home. People don’t realize how much high earners do to support our society.

Trust me I know disabilities can (literally) come on overnight & after you have had children as a non disabled person.

You'd be surprised at the intellect of a lot of people earning over £100k. I know a woman earning.£170k who can't organise her way out of a paper bag, I have absolutely no idea why they feel it's worth that much money employing her, but obviously she has the guest of the Gab, to have got where she is, it certainly not intellect & absolutely not her ability to think ahead 🙇🏻‍♀️🙇🏻‍♀️

She is not trying to get ‘free’ childcare, she is trying to reduce her tax bill. Particularly as earning an extra 10k gross reduces her take home pay. On £110k per year PAYE she will have paid in the region of 30k in income tax alone. Even if she receives a partial refund for childcare costs she will be a net contributor to the county’s finances by a large amount. How much do you contribute?

OP, google SIPPs

If this was a social housing tenant with NO kids trying to reduce their hours so they could get more help to pay for their shitty little bedsit you and some others would be humming a different tune!!

There was a similar thread a few weeks ago. The responses were colourful.

It’s hypocritical to say only non-contributors who chose to produce kids they can’t really afford are entitled to a break but the taxpayers who support them aren’t.

Exactly, @Firefly100

I only get the government basic pension at work which is why I am asking if manual payments work. I also needed the money to fund multiple rounds of IVF which were self funded and failed multiple times over the years before falling pregnant with my first.

clearly not - as I thought Mumsnet was a safe place for mums. Hence why I was asking for some friendly advice rather than a barrage of abuse. I didn't realise working mums were so frowned upon!

It really isn't. Everyone "plays the system" to some extent. Even if just shovelling savings into as ISA to avoid paying tax on interest. Lots of low paid people deliberately keep their hours/earnings low so they don't lose benefits. Lots of middle earners don't take promotions or pay into pensions so they don't lose child benefits. People buy extra years of NIC contributions to get full state pensions. It's ALL entirely legitimate, allowed, moral, planning.

Exactly. Op is looking to the future to hopefully reduce any reliance on social care provision, while , at the same time raising a future taxpayer, on what is a good salary, but hardly places her in FatCat range.

Meantime, some on MN suggest she’s despicable for doing what any one of us would - I.e. put our own family first.

Yes, you can ask your employer to increase your contributions, and theirs will just stay the same. That will be easier than doing it yourself, although that is an option, but you’d need to do additional admin to confirm your reduced income for the free hours & tax free childcare (which you’ll also qualify for - you only mention the free hours so if you hadn’t already, look into the tax free childcare as well).

Nail on the head. On her earnings over £100k, she'll already be paying a marginal tax/nic rate of a whopping 62%. Yet that still isn't enough for some people who are net takers. At least OP is a net contributor to the country, even if she makes pension payments, she's still contributing thousands more per year than someone on benefits or earning less than average.

I'd rather help out people like the OP who work thsn scroungers like your neighbours.

@safetychangeat least stay in the current age when you bash those you know nothing about.
The 16 hours was a tax credits thing. Those no longer exist. With UC now everyone must look for a job of over 30 hours or spend 30 hours looking for full time work. They will come down hard on you too. The AET is about £839 a month.
HTH

Being a first time mum to be, I was literally trying to follow Martin Lewis advise but asking how people best do this. This has nothing to do with intelligence, as I mentioned before I assumed "mums"net was made to be a safe place for mums to support each other.

@WellINeverrrdespite how unfair the world is? Despite what we know about institutional racism/ sexism/ the impact of trauma/ hidden disabilities? You still would rather bash people whose situations you know absolutely nothing about rather than admit that the world is biased and there are legitimate reasons why the MAJORITY of people cannot be on 100K salaries.
IQ for example
Try to find a 100K salary position for someone with a mild learning disability. You would have no idea that the scroungers you judge and berate have a mild learning disability or were care leavers or raped as children? So get the fuck out with your judgement.

I do wish the people who have zero understanding of taxation at the 100k plus level would stop making stupid statements about net take home pay of £8k per month.

To try and educate those that have no understanding there’s the personal allowance, then the first tier of tax bracket, then above £50k earnings the tax bracket increases. Above £125k you also lose the personal allowance as well.
These people pay significant amounts of taxation.

Talk to your employer and they can help you pay more in to reduce your taxable income.

Ignore the unkind posts above.

@Katie1186 I think you will need to check whether the £10k extra towards your pension plus whatever you are currently paying doesn't exceed the maximum you can save towards a pension in any year. I doubt it will, but I don't know all your financial circumstances

Calculate pension tax relief - Which?

But since I didn't say that...?

I don't know what you mean by 'government basic pension' - just NI, no additional pension contributions at all?
Please go away and find out lots more about your employer pension scheme first. Depending on the nature of that, you might be best contributing additional amounts there. If not possible or advisable, you can open a private pension. Both will reduce your taxable income.
Not only is just over £100k a bad place to be for child care, you will also be losing some of your personal allowance with every £1 you earn between 100-125, it's a highly taxed spot. So contributing the amount over 100 to a pension is a no brainer for 3 reasons.

I would much rather more women were earning 100k and paying plenty of tax than living on benefits, the country would be in a better place.

You lose the PA over £100k - £1 for every £2 over £100k.

In which case your children are in school not nursery as OP’s will be. So your costs are significantly lower than hers will be. At that level of income you are a net recipient rather than a net contributor so are already benefiting far more than OP will.