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!!

That says people need to earn more than £9,500. That’s well below the personal allowance threshold where tax would start to be paid.

I dont think people realise quite how extreme the loss of childcare is - and when layered on top of the loss of the personal allowance, you get some silly rates which incentivise this behaviour.

On £110k you take home <£3,500 more than on £100k.

If you lose tax free childcare (£2,000) and 15 hours (Say £4,000)… you’re £2,500 worse off than earning £100k.

Why would anyone just tolerate that? It’s patently absurd.

My ‘100% tax’ rate will be from £100-140k next year with two in nursery. I’m thinking about going part time to achieve the same as OP - it makes the most financial sense.

No one seems able to justify why this enormously generous benefit is for 95% of parents but with this insane cliff edge for the remainder (who are paying masses of tax to fund these schemes)

With respect low earners are not net contributors- they are taking out more than they put in. Op earns enough that she is still a net contributor- she is paying for part of your government services as well as her own. why should she not structure her affairs in a way that work for her?

So report them, easy I hope

Oh irony

How many hours do you actually work?

I agree

Op you could also reduce your hours to a 4 or 4.5 day week and have more time with your child if that works for your career - that's what I did to stay under the child benefit cap

Women have the ultimate control over whether pregnancies are terminated or not, so yes the choice of bio-sire and circumstances is ultimately theirs. Many people choose to have offspring in short-term relationships, or with awful men, or without preparation and savings and housing .

And then expect to be bailed out by higher earners like the OP.

So op helps pay for your childcare via uc yet you think she shouldn’t get her own paid for? How do you think that is fair?

She earns about £6k,
A full time nursery in London is about 2k with no government help.
Her mortgage is probably 2.5k. Bills another 500.
This leaves her with 1000 a month to pay for everything for her and her child. Some people might think that's a lot but it's definitely not a rich woman's disposable income budget. No designer handbags or ski holidays or Range Rover for her on that budget.

she doesn't think... just spits the bile

They’ve upped the threshold because minimum wage went up. It’s the equivalent of 16 hours a week at minimum wage, which is the same as it was before.

What an arsehole of a reply.

OP is not doing anything immoral.

although I see there are a lot of ignorant arseholes on the thread

I earned a little over 100k in the last couple of tax years and have put the "excess" into a pension. I could have made extra payments into my employer's scheme but the first year I was a bit late for payroll, and the second year I decided I had more confidence in returns from the private pension so contined to add to that. Anyway, I just opened an account with Vanguard and put the money in there. It was very easy and pretty much instant. Then you just have to record it in your tax return later to get the taxes calculated correctly.

We don't have young children, so childcare isn't an issue. Even without that, the 60% effective marginal tax rate due to withdrawing the personal allowance from £100-125k is well worth avoiding. I'm actually someone who thinks that on the whole tax rates should be higher for higher earners including myself, but the effective tax rate between 100k and 125k is crazy. It goes down again after that which is really unfair and distortionary and badly designed.

So I think you'd be very sensible to put more into your pension if you are earning a little over 100k. It's perfectly legal and reasonable. And very easy.

It's more like £2000 for a full time nursery place without government funding

And with a student loan and minimal pension contributions it’s much closer to £5k

Not every career will allow this though.
Now let's imagine OP is an NHS consultant - do we really want this to happen?
Just proves how stupid this cliff edge is and how ignorant is population who support it and try to guild trip OP

If you’re only earning £1900 a month before tax (as you say) you should be entitled to some uc help with childcare.

To answer your question op you can do it yourself by setting up a sipp if you want. Then you just need to do a tax return to get the benefit.

alternatively if your employer allows extra contributions into your scheme you can do that. But you don’t need to - it’s fine to pay after tax into a private pension. I use vanguard as the fees are low.

to get £9500pa one needs to work less than 15h per week. I'd say these people don't need childcare at all

No you can make the pension payments yourself. It's just that the amount you subtract from your income to get adjusted net income is the "grossed up" amount. So if you pay £1000 into a pension scheme and the pension provider already adds in the basic tax benefit of 20% to make it £1250 into the pension scheme, then you have to subtract £1250 from your income to get your adjusted income for personal allowance purposes.

Meanwhile if people like OP werent paying 10's of thousands in tax every year disabled people unable to work would get even less, they'd get sweet FA because there would be nothing to give.

Im pretty sure over half the UK population are net recipients, eg when all is accounted for they don't contribute anything, they take out more than they receive.

You don't bite the hand that fucking feeds you. Making salary sacrifice to your pension and thus reducing your taxable income is perfectly legal OP is making provision for her retirement so that she isn't expecting the state to fund her like half the UK population.

Also, unless op is planning on starting a football team, this is time limited

so maintain her high paying job but getting help in those difficult childcare years is a long term benefit to society

Whatever the cut off point there will be someone doing less hours or upping pension contributions to get free hours or whatever. At least the OP is a net contributor. Unless you pay tax on over 40 ish K a year you are not a contributor. You are taking out more than you are putting in. Most people never contribute.

As someone who can't work due to disability & may be affected by the upcoming cuts, I find it infuriating when people like yourself are attacked. You aren't the enemy! Everyone deserves to maximise their income for the benefit of their family! I think you will have a pension account with your provider which allows you to increase your contribution. If you don't, speak to your payroll. Will be much easier if you can have it done at source I would expect