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!!

Well five years ago ppl thought applause could pay the low earners bills!!!

The problem at the moment is that the cut off points are cliff edges - so you earn £1 more and you lose everything.

they need to find a way to smooth the curve

so for eg get rid of the losing your tax allowance but increase the higher rate by 1%

the treasury has some very clever people working for them - they should be able to figure something out!!

On a practical level of course people will do what works best for them. But let's not pretend well off people cooking the books is somehow more moral than the less well paid doing so such as some cash in hand jobs to avoid losing universal credit. You'd all be queueing up to put the boot in if anyone admitted to that.

But one is legal and the other isn’t.

Also by saving more now, people like OP will continue to be higher taxpayers rather than burdens / net takers in old age. They will contribute more to the economy all of their lives. The taxation is merely deferred.

it’s right that they get a small break in return.

Absurd comment.

Do you not see the difference between:

• being paid in cash to avoid paying tax / losing UC
• putting money into your pension, as is legally allowed and actively encouraged by the government.

You can of course expect everyone to look after themselves - but these two examples are quite different.

@DrCoconut100%
Benefit scroungers vs ‘doing the best for my family/ maximising my income/ only getting what others do who don’t work as hard’ etc etc etc. Two sides of the same unethical coin.
I will never complain about paying tax.
I will never moan that I am too well off to get X, Y or Z.
Everyone has a choice, if the alternative is so great then you can go and live like that, feel free. If it’s so easy and appealing.

Did they? I remember us clapping for the NHS during covid but NHS staff are all paid (some of them as much as op).

But everyone is entitled to 15hrs and no one gets more than 30 so it’s only the extra 15hrs she trying to lower her income for, less than 500 a month.

Quite. Also don't assume just because your nursery is inexpensive, that it would cost the same elsewhere. Outer London is circa £1000 a month, inner London £1200 a month, for example

Why should disabled people be any more entitled to benefits than a working person is to free childcare.

How is that even a question that passed through your mind?
Children are a choice. Disabilities are not.

HTH

Those are two entirely different things. Not reporting your income when claiming uc (ie doing cash in hand jobs) is tax evasion and benefits fraud. Op (a net contributor of tax) is planning to pay extra into her pension to lawfully set up her affairs so she is eligible for free nursery according to the law. Completely different scenarios

‘only £500 a month’.

Between £100-110k she will take home ~£3.5k.

So that ‘only £500 a month’ means she’s no better off earning £100k vs £100k.

And only the 15 hours at 3 are universal.

I certainly do. The first one puts food on the table for the family, the second one doesn't need to because there is plenty of food on it. I am not condoning the former, but only someone who has never been in that position would condemn it. When laws are made by the wealthy and for the wealthy, then morals go out of the window. I wonder how quickly MP's would address poverty if they were limited to the average income of the working age population. It is actually in everyone's interest to drive up income across the board, and the best way of doing that, and getting unemployed people into work, is to make work pay and to make work accessible. Making poor people poorer doesn't do that. But MP's have no incentive to care what happens to the poor or the vulnerable, because they have a nice sinecure. Restrict them to average income and one job only, and see how fast they could address real change.

You can comfortably double those figures.

Childcare isn’t a choice if you’re working. And disability might not be a choice but eligibility for benefits and amount of benefits etc for disabled people is a choice for society. As is paying for childcare

What a great moral! Let us all admire you.

No, it's all very different - people cheating benefits system, cash in hand, minimising hours etc etc all have someone else (like OP) paying for them. OP pays a huge proportion of her earnings in tax already, she just draws the line under ridiculous cliff edge.

Everyone has a choice, if the alternative is so great then you can go and live like that, feel free.
Are you saying this to those on UC who criticise high earning OP? I agree with you here, let them get such job and see how well they'd do.

Got it.

So tax evasion by not declaring earnings to claim benefits = good and morally righteous.

Working 40-50 hours a week and paying £30k+ in tax a year, more than you ‘take out’, and contributing a small amount to your pension so you don’t actually lose money because of the governments badly implemented cliff edge = bad and morally wrong.

OP will literally lose money at £110k vs earning £100k in her current situation due to the loss of childcare. That shouldn’t happen, but that’s how the government has decided to implement the scheme. It is a no brainer to up pension contributions - everyone in the country eoth young kids in this income bracket does this.

I know plenty of people (builders especially) who are earning far more cash in hand than op likely has available.

op contributes to society and pays for others. Why should she not use options open to her to make things better for herself?

That’s not tax avoidance- it’s tax evasion and benefits fraud

She would lose out on the 30 hours between 9 months and 3. Then she would lose out on the additional 15 hours between 3&4.
Plus she will lose the tax free childcare on top.

When the government puts out the tax evaded figure that isn’t just big corporates

in fact a lot is individuals getting cash in hand and a big amount is VAT fraud by sole traders.

for a system to work it has to be fair and it has to work in a fair manner - whichever end of the earnings spectrum you are

Apologies - you are of course right.

It’s tax evasion.

OP is merely using normal tax planning.

According to HMRC, most tax evasion (the tax gap) is from small businesses and lower earners not large corporates or high earners.

I cannot believe some of the responses on here, why should OP not take advantage of tax benefits that are available to her, particularly given her huge tax burden?

Every person who has left a negative comment should seriously ask themselves if, were they in the same position as OP, they would do the same thing? I certainly would!