Childcare vouchers definitely going...

[morningpaper]

apparently

adding £2,400 to the childcare bill for top-tax earners

Sorry - that sounded very pointy and agressive! But you know what I mean. We're all out for what we can get to provide for our families, but there are plenty of people who really, properly struggle every day and it seems unfair that some of us get more help than they do with childcare.

Having said that, I worry the vouchers will be scrapped and the money will 'disappear' rather than being channelled into giving lower income families more help.

Fleecy, yes I think those people need more help, but dont they get it in other areas? I just see this as the only area in which I need (fortunately I know) or get any help.

The "haves" are (IMO) those wealthy few who dont work but can afford nannys etc.

The "haves" (only relatively) that these childcare vouchers help are those that need or want to go back to work but just appreciate the few £'s a day that the government gives back (its not paying it to us, its simply not taking it from us) for that small proportion of our salary.

I agree that this tax is badly targeted and would be happy to see it withdrawn from higher rate tax payers.

IIRC the higher rate tax threshold is about £39k for an individual and so I am not convinced by the argument that a take home salary of £39k a year (and above) with a take home monthly salary of £2400 (and more) should be getting a tax payer handout (which it is, in effect) of £100 a month.
A basic rate tax payer on say £25k a year has a tax home salary of £1500 (so £900 a month less!) and yet only gets a tax rebate of just over £50 a month.

Can any higher rate tax payer please explain to me how this is in any way fair?? I would genuinely love to know the reason.
Nursery fees are the same regardless of whether you are a higher rate or basic rate taxpayer.

If a big mortgage is the answer (which i suspect it might be - or alternatively an expensive lifestyle to maintain) then I am not sure why the taxpayer should be subsidising higher rate tax payers large mortgages (and I live in West London too , so please don't tell me you live in London, higher costs yadda yadda).

Can I ask a silly Q, can smaller companies or the self employed not apply to get them then?

can smaller companies

yes

or the self employed

no

molly: It isn't fair at all.

What would be fair is making it tax-deductible at a basic rate for the second earner or single parent earner

What would be fair and easy is making it tax-deductible for the second earner or single parent earner

My DH is a higher rate tax payer (we both claim childcare vouchers) but I agree that the relief should not be at the higher percentage. However, once again remember its not money that anyone is giving to us, just money that they are not taking away.

These vouchers have been good for us, but the system is definately flawed. Free nursery places for 2.5 or 3 hours a day is also flawed, as it doesnt help parents in getting back to work.

Plenty of parents I know, the DH wors full time and the DW works part time, so therefore requires some form of childcare. It would be better if the nursery places totalling 12.5 hours a week were able to be used in any form you wish - so you could use it over two or three days. Many school nurseries have wrap around care these days, and children are able to go from 9 until 3 or even 8 until 6 in some cases. So why not use the 'free' bit towards that, and then top up with paying the rest out of your wages.

The only down side of this is traditionally school nurseries were either afternoon or morning sessions for 5 days a week. Surely if you changed the system, and allowed children to do a morning and afternoon session in one day, so could only go 2.5 days or week, or some went 5 mornings - it would be a bit more admin for the school nursery staff, but woud get more kids through the school who would potentially then choose that school for primary education in reception onwards.

Realistically I cant see that happening, as schools still seem to operate on the basis that parents dont work!

pamelat - I do see exactly where you're coming from and I agree it would be annoying for you to be just over the threshold and get no further help, exactly the same as someone who had twice your income.

I just think our country is in so much poo, we're all going to be paying more in taxes and getting less benefits for a long time, so this just the start.

When we had the webchat with GB, everyone was saying 'what about more money for xyz' but the thing is, we've already spent so much and we've got to pay for it somehow. Doesn't make it right, but it's true.

And to give more to those on genuinely low incomes, the money has to come from somewhere.

My sis has a 3yr old son, she had him young and doesn't have any qualifications. She can't work because she's not able to get a job that pays enough for him to have full-time childcare. He now goes to nursery, five 2.5hr sessions a week. She can't work around that - and that seems crazy to me. She literally has no choice. We talk about wanting all women to have the choice - but someone's got to pay for it!

andirobobo - I wish they'd let you do that too! At least that way you could get a couple of free days altogether.

Someone earlier on the thread said that the places for 2yr olds were going to be for 10 hrs a week. If that's true, it seems insane. How does that help most people?

Lots of playgroups are being encouraged to extend their hours, certainly in Swindon this is true anyway- so that you could use your "free" sessions more flexibly.

We use childcare vouchers and are hopping mad that they are being phased out. It just feels like a smack in the face for trying to juggle work and a family.

It wouldn't be as bad if what they were proposing to use the money for would actually help other people- but where is the evidence that there is the demand for nursery places for 2 year olds? And who will provide these places and have they been consulted about it?

pamelat makes a good point - it's not a handout that higher rate taxpayers are getting, it just (very slightly) reduces the already higher tax that they're paying. If higher rate taxpayers choose not to work then we'll all be worse off

pamelat, yes I do understand that the rebate is money that you do not pay in tax rather than money paid to you but the net effect is the same. You have £100 (or £150 in your case) extra per month that you otherwise would not have had.

I also do not get the argument that it would not be worth working without this rebate.
I cannot see how £50 per month for a basic rate tax payer or £100 per month for a higher rate tax payer is the difference between you affording to work or not. It does not make sense.
IMO people do not understand the true value of the rebate (that it is only the tax and NI you save) and think it is for the full £243 as it is deducted from salary. One of my colleagues certainly thought this.

While I'm on the subject , I also do not agree with the argument that this is the only help middle class earners get. whinge whinge.
What about the NHS, schools, police, fire service, safety net of welfare state, defence, nice country to live in compared to many etc etc.

THAT is what you get for paying taxes

molly - despite how much someone earns, the tax saved per month, say £95, may actually be not much less than the marginal financial benefit that makes it worthwhile working

Mondaymonday, sorry to labour the point but WHY will we all be worse of if one higher rate tax payer refuses to work (at their high tax rate salary)?. Their job would still exist and someone else would do it and pay the higher rate tax. That argument makes no sense.

The only person who would be worse off is the higher rate tax payer who has given up their job in protest at not recieving a £100 tax rebate.

If you follow your argument, it would be better for all higher rate tax payers to become lower rate tax payers ( or not work at all - so no income tax payer) so they do not lose as much rebate (£50 rather than £100) which completely disregards the fact that their tax home pay is far in excess of the lower tax payer which MORE than makes us for the lack of rebate!

I never got childcare vouchers - the nursery I used stuffed up and eventually they were returned to my employer who was v. pissed off at all the kerfuffle. By this time, the nursery had gone downhill and I moved ds to a nanny who didn't meet whatever the requirements were - they were just extending it to nannies and she was working towards her NVQ3 (which we were helping to fund).

We survived but it's a tad galling that our taxes went towards a break we didn't get for lots of people earning a darn sight more than us!

Childcare is hideously expensive, while childcarers (CMs and nursery workers, think nannies do rather better) are very badly paid (our nanny had been earning £11k gross on, IIRC, a 1:3 ratio in a baby room - so she was pulling in at least £36k for the nursery). Someone's making money out of it somewhere, though...

Agree with the idea of making childcare tax-deductible at basic rate only. Higher rate taxpayers would still get some benefit as they do pay basic rate tax, just not on their whole income.

Mondaymonday, yes but that goes back to my earlier argument - if you have a tax home salary of £2400 per month (£39k per year) how is it that £100 makes such a difference to you monthly outgoings that it is NOT worth working!

As I said in my first point, I suspect that it is because those people have a large mortgage or a lifestyle that is higher than they can comfortably afford.
I do not think tax payers should be subsidising either of those things!

anyway, must go, off to a meeting!

molly - I definitely did not say that we would all be worse of if 1 higher taxpayer chose not to work . If a significant number choose not to work however, then they will need to claim on benefits, which will be worse for everybody. And you're assuming that the £100pm saving is pennies to them - I'm telling you that in many cases this is not much different to the marginal financial benefit of working

Fleecy where do you think the money comes from for tax credits? Maybe the extra tax some working mums pay apart from the childcare vouchers? This isn't just a handout - it's a way of helping mothers work and pay into the tax coffers. If enough mothers quit this could lower tax revenue.

molly I was on 27K per year pro-rated to 3 days a week and I was losing money with two kids in nursery (3 days a week). All of my salary went to the kids nursery. Every cent, plus I paid for petrol. And I was on 27K a year. I quit. If I'd had two sets of vouchers (if my self-employed DH could have had them) then I'd have been able to afford it or afford a nanny. The government will be getting less money in taxes from our family this year. Personally I'm happy, but I can't see how this makes financial sense for the government.

The vouchers are poorly managed though. I would support only giving tax relief to the lower level (so higher earners wouldn't save any more than lower earners - we all get the same help).

Fleecy your sister should be able to get up to 80% of her childcare costs paid for through tax credits. That is a lot of help from the government and a lot more than is available from vouchers.

monday: Let me know if you meet a higher-rate tax payer who decides to give up work and live on benefits because it's a better option

starlight - not all working parents have partners!!

And quite apart from the benefits, a lot less tax would be being paid if a significant amount of working parents chose not to work. Your assertion that there is an orderly queue of suitably skilled and qualified people waiting to take every higher rate taxpayers job is quite naive

quite morningpaper it is a nonsensical argument!

anyway, really am of now!

Not in the middle of a recession, it isn't. And even in better times, no-one is irreplaceable.