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!!

I’m amazed you think there is any difference.

If you're paying all your childcare costs yourself you should probably look into tax free childcare.

@LittleBearPadbut I bet I work equally as hard. I just do a job where a 100K salary isn’t an option. But all it takes is someone’s loved one to end up in hospital or a pandemic and you realise how essential we are. We all need to pay taxes. Means testing should be used. I’m too well off for Universal credit, but I’m glad it’s there for others. I don’t bitch and moan about it.

@Gandalfatemyhamster As someone below already stated, it’s around £300-500 of a monthly wage of £8000

Wrong.
Stop basing your opinion of incorrect comments.

But as a PP suggests you can see you can apply here https://www.gov.uk/get-tax-free-childcare

Women having kids they can’t afford?

WOMEN?!

FYI I had my children married. He ran off to ££££. I raised them alone. I couldn’t really afford them at all but there wasn’t the help then and so they did suffer financially. I have never really recovered financially.

But I didn’t make them on my own. FFS.

Why should disabled people be any more entitled to benefits than a working person is to free childcare. If a working people didn't work then there would be no money for disabled people either.
It is disgraceful how much tax higher earners have to disproportionatley pay to keep the non working classes fed and watered.
100k goes nowhere if you arent getting council tax relief, housing benefit, grants, free school meals, heating grants and what not. Not mentioning the additional services higher earners use that keep many other people in jobs, ie commuting, coffee shops etc.

Then apply for tax free childcare too https://www.gov.uk/get-tax-free-childcare

Where are people getting £8K takehome from?! £100K most definitely does not produce £8K takehome pay.

OP -
Funded hours entitlement is based on adjusted net income, which is your income minus pension contributions. You can either ask employer to increase pension contributions, or open a SiPP and at the end of tax year you figure out what you're over by (i.e., whats over £100K) and put that amount into the SiPP. SiPPs are simple to open online.

Remember if you're already putting a few % into pension and are only a bit above £100K then you're likely already below the £100K adjusted income threshold anyway, so do check this.

And means testing is used - at £100k. That’s where there’s a cliff edge that OP is trying to manage.

Please don't let anyone make you feel bad about your decisions OP. It seems some people believe you should work full time whilst, spending over half your earnings on childcare. How dare you want what's best for yourself and your children?

Alternatively, they might think you should sacrifice your career and stay at home, because mums shouldn't be allowed to try and have a career and children.

Last year, the UK spent £13.7 billion on foreign aid, while many in this country struggled to afford basic necessities like bills, food, and healthcare. The fact that you're contributing to your pension (albeit less) while supporting a UK childcare provider is not the problem.

Focus on what's best for your family, and ignore the sanctimonious critics shouting into the void.

Exaxtly, nursery in my area was around 1500 a month. My rent is 3000 a month, my bills are 1500 a month. My outgoings are 6000 a month.
I have nothing left to save or go on fancy holidays.
I earn 120k a year which is takehome of 6000 a month. It all is eaten in taxes and bills. I don't get child benefit, my personal tax allowance is reduced, no tax free childcare and higher rate income tax.
120k a year gives you 6k a month after tax and no state support.
And I work about 60 hours a week.

I think people don't grasp that the £100K cliff edge isn't just about childcare. Over £100k you:

• Immediately lose funded childcare - worth £000's per year
• immediately lose tax free childcare - worth £2K per year
• lose your personal allowance (tapered) - which raises tax rate to 62%

This genuinely often means a person working with 2 kids in nursery is making £0 above the £100K mark.

Why do we expect people to work for free?
This is why so many doctors now work part time - its such a simple way to avoid this insane cliff edge. You either reduce hours (not great for the economy generally, given we're in a productivity crisis here in UK) or you try and contribute to your pension. Working that extra amount for £0 is illogical, regardless of your morals.

Give the OP a break, she is paying a lot of tax and working hard to give her child a good life.

I know people who get their employers to lie and say they are working 16 hours when they are working 14/15 (in a min wage job so contribute minimal tax) so they get some free childcare and use that time to sit on their backsides; I know what I have more of a problem with.

I sacafice my bonus each year into my pension so I don't lose uc which pays some of my childcare. I think you have to do it through your employer to be seen as less income, if you do it manually I can't see how that will work as it won't show on your wage slip?. Stupid system created this way, I don't feel like its playing it but being sensible.

It's easier if you just ask your employer to take a higher % from your salary and pay it straight in.

Ridiculous post!

Now someone that will probably be a net contributor for most of their life is being shamed for trying to avoid an insane tax cliff edge. The escalating benefits bill has much more to do with the number of people suddenly claiming to be disabled. Reform is necessary! Of course some genuinely disabled people will be worse off because of this, but they need to blame those that are manipulating the system and claiming disability benefits when they shouldn't, not people like OP. You should be very wary about shooting the golden goose!

Op, to answer your question and not to go into completely irrelevant debate - your employer might have an option of additional contribution, you need to ask Payroll. If not, you can open SIPP with any platform, eg. Vanguard, HL etc and transfer your 10k there. Then you'd need to claim via tax return, so more complicated but still will save you a lot.

To be fair, 100k a year equates to about 67k take home, so more like 5.5k a month.

Clearly this poster isnt familiar with the concept of paying tax

I asked my employer to make contributions thus bringing my salary under £100k by about £100. I don’t feel guilty in the slightest. I pay a lot of tax and access public services very little. It’s the people who draw from the public purse the most and give nothing that should receive the criticism

They were responding to a previous poster who hilariously thought that a £100k wage gave an £8k per month "take home" - so who completely forgot about income tax, NIC, workplace pensions, student loans, etc.

And there are the low earners who don't qualify for the new funding who have to subsidise high earners free hours because they have upped the threshold for the amount of money needed to be earned per month.

The high earners are still paying huge net amounts of taxes etc even after the few "benefits" they're entitled to so are net contributors to a large amount.

Lower earners are net "takers" as they don't pay anywhere near enough taxes to cover their benefits, let alone contribute to other public costs such as infrastructure, etc.

It is playing the system in the same way someone not working extra hours because it might affect their benefit entitlement. It is only more palatable to people on here because they are high earners. Same thing though.