New childcare tax free scheme

[Limpetsmum]

Am I right in thinking come autumn I'm going to save a fortune in Childcare. Currently have a nanny for three kids (4 days a week) + one day nursery.
I pay £2000 per child nursery x2 = £4000 (one child gets free 15 hours) +
Nanny = £20,000/year for four days a week.
Total = 24000

Does that mean I'll get £4800 (20% of 24000) from government?

Currently all I get is about £900/year from Childcare voucher scheme. It seems too good to be true.

Just want to check that scheme covers nanny pay and not just for nurseries.

Baby giraffe 86 - you've not reached your maximum earning potential at the age of 28 years old. Yet you continue to work hard. You're driven to better yourself and get a financial gain from your last post. How does that differ from me?!?
I really don't get why I can't post a fact that people work hard to get the money they earn without getting a battering.
Fine, I earn more than you. I may or may not work harder than you but we're both at work trying to earn our own money and you will get the same percentage tax relief as me. Are you just annoyed that I earn more than you?!? Again, seems pretty childish! Maybe you just need to work a bit harder(!)

If you have a problem with where you are in life, don't vent your frustration on others, make changes to get where you want to be.

Limpet I imagine it is your condescending attitude baby giraffe is annoyed by.

Soon to be six - I can live with that.

I think that's the point Limpet! You don't care that you're offensive, even possibly rather enjoy it for whatever reason. Don't dress that up as part of your "hard working ethic" though, it's just unpleasantness!

And I speak as someone with similar household income / nanny / childcare situation to you Although I have to work far fewer hours to achieve it. Perhaps because I am so much more productive and deserving than you? Or possibly, just possibly, because I've had a particularly fortunate combination of luck, capability and opportunity to boost my hard working attitude in a gainful direction?

Attitude/hard work count for a lot in life. But it's sadly not some single magical factor why some people are a lot richer than others. Wouldn't life be lovely and simple if it was, then we could all bask in the knowledge that we are each getting exactly what we deserve, no more, no less.

Limpet - at no point have I vilified you for what you earn, more your attitude and belief that those who earn less act as though they are entitled to something. this is what I disagree with, especially in the sense that now you are aware of the new scheme you are acting just as entitled as anyone.

we will both benefit from this scheme, yet some of us will do so with decorum and not sing from the rooftops that we pay tax to help those less fortunate (see, everybody can take something childish from anothers posts - everybody's tax does this, not just yours/'the rich' as it was so eloquently put)

Not here to argue, In answer to your OP I gave my opinion and my knowledge on the scheme in the previous few pages. I hope that information has helped in the way it was intended - to pass on knowledge and nothing more.

I think that one can question the relative value of different types of income redistribution through the tax system without questioning the work ethic or value of those at either end of the income spectrum.

It is perfectly valid to question at what point certain benefits cut in and cut out, and whether that presents the fairest situation on a net basis.

It's a point on which people will never agree but earning less (or more) doesn't mean any person has less right to a view on how best to prioritise government spending.

I even think it's possible to do so without calling people names or suggesting they come from a position of jealousy or workshyness. Wouldn't that be nice.

Are you Sam Cam Limpet

It's the oft quoted hard working families drivel in your posts that gets my back up. And yes, it does imply that anyone not in your position is less deserving "hard working"

Honestly, op is defending herself for availing herself of a legitimate government policy. It's clear that op and her DH do work hard, it's not a dog eat dog competition is it? most people work hard for their money and op is entitled to be happy that she can save some money, just as any of us would be in the same shoes.

Apple - I was on board with that until her last few posts which went well beyond that.

I pay higher rate tax, I'll be better off under the new scheme, and it will make my life easier than previously. But I can see how others, regardless of what they earn, can legitimately question whether making my life slightky easier should be a priority for government spending without accusing them of being jealous or childish.

Oh dear, some very annoyed people.
I'm not 'entitled'to anything. I will graciously accept any help with Childcare costs if it's being available. As I said it's a tax break in money I earn and not a handout.
I never made a fuss when my child benefit was stopped, when my pension was cut, when I never got a due pay rise. Similarly if the new Childcare scheme is retracted, I won't go around slagging off the government or the 'poor' who are more 'entitled' to money. I'll just crack on and continue to do what I need to do.

I guess I come across smug in life because I look at those who whinge and complain with pity. You can complain and resent others all you like. But it's not going to change the fact that others are more financially successful than you. I don't look at the previous poster who earns same as me for less hours and think how dare she - she should pay more tax. I think good for her. She's made some good choices, probably has some priviledges and deserves whatever she earns.

If I can be happy for others who earn money why can't some of you 'poor' souls out there be. Or can you only be happy for those who earn less than you and have to have financial support in whatever way.

I have no problem with people in work needing tax credits. I have a massive problem when people don't realise they're bread is buttered on both sides and think life is unfair on them for whatever reason.

I'm signing out now - got the info I needed and it's frustrating arguing points that were never made, to people who have for a bee in their bonnet for whatever reason. It's easy to vilify those who are not 'in need'.

I was hoping that this thread was going to be about the practical effects of the scheme , compared to the existing childcare vouchers, etc. i was hoping we all could agree that childcare is extremely expensive and it is a good thing for parents to work if they choose so.

Last posts at least have been a battle over entitlement and other peoples work values.

Sigh.

I thought everything was going in that direction - including a very heartfelt and eloquent apology from honeypots - until 11.25.

Pity.

Yes, that was a very elocuent apology. Let me add my apologies if i have ofended anyone. I hope not.

what is most saddening is that OP has accused me of being childish and jealous of her income. if this was the case would i have not offered up my knowledge of the scheme after being aware from the OP what is spent on childcare?!

I am more than happy for everyone to receive this reduction, i think its a wonderful thing and have said in my prev post I am glad of it as now those who could not previously get vouchers are entitled to the tax free care. yet somehow have come across as jealous and childish - this was not my intention.

my intention was to make a point that just because some don't earn as much as others do not put this down to the lack of hard work and want to provide - I am the childish one for having to explain why this has been construed in such a manner?! WOW!

My only problem with the OP is she doesn't seem to understand that she is indeed accepting benefits paid for by other tax payers.
She may well be contributing to the pot, but so are many others. She should accept the handout as many of us do in one form or another.
the OP seems to think that somehow her working makes her a cut above the rest and because of this she isn't accepting a handout she is entitled to.
Its laughable really.
Finally, the OP seems to believe that working hard is a preserve of high earners and anybody who believes otherwise is jealous of the fact she works 50 hours to pay off debt and hardly sees her kids.
Not something to aspire to really.

Wow morethan, grumpy much?

For context limpet, my husband and I are civil servants with family income in the same tax brackets as you. Money is tight for us at the moment but we get by, but I only have two kids and see it as a short term period before my eldest is in school. If I'd had twins, like you, I know it would be crazily difficult. Which is a sticking point. We earn lots and struggle, so can only imagine what it must be like for those who don't earn as much!

For me, these political "incentives" aren't helping those who most need it. Rather than helping you and I, can more be done to assist those earning less? You and I both know we don't need help from the state. Yes, it would be nice. But we don't neeeeeeed it IYSWIM?

If we are finding things tight on our incomes, can you see why more people can't afford to work? And that's not a great way for a society to work. It's like our leaders saying if you earn lots, have kids, you can (barely afford to!) but can return to work and get on that path to be rewarded and earn more. If you don't earn lots and have kids you may not be able to afford to work. It's just daft. I don't see myself as more or even as deserving as my friends who work equally hard in lower paid civil service roles (teachers and nurses) because I contribute more to the tax pot.

I'd like to see all hardworking families rewarded for their choices, and those who need extra help, to get help. But I'm an idealist and have no solutions.

Wish I did!

For context limpet, my husband and I are civil servants with family income in the same tax brackets as you. Money is tight for us at the moment but we get by, but I only have two kids and see it as a short term period before my eldest is in school. If I'd had twins, like you, I know it would be crazily difficult. Which is a sticking point. We earn lots and struggle, so can only imagine what it must be like for those who don't earn as much!

For me, these political "incentives" aren't helping those who most need it. Rather than helping you and I, can more be done to assist those earning less? You and I both know we don't need help from the state. Yes, it would be nice. But we don't neeeeeeed it IYSWIM?

If we are finding things tight on our incomes, can you see why more people can't afford to work? And that's not a great way for a society to work. It's like our leaders saying if you earn lots, have kids, you can (barely afford to!) but can return to work and get on that path to be rewarded and earn more. If you don't earn lots and have kids you may not be able to afford to work. It's just daft. I don't see myself as more or even as deserving as my friends who work equally hard in lower paid civil service roles (teachers and nurses) because I contribute more to the tax pot.

I'd like to see all hardworking families rewarded for their choices, and those who need extra help, to get help. But I'm an idealist and have no solutions.

Wish I did!

What happens if one parent is a postgraduate student and the other is working?

I thought that postdocs work, does the postdoc in question?

mindifidon't

not grumpy really and doesn't really affect me one way or the other tbh.
i just say it how it is and don't like dressing stuff up to mean something else.
I don't think the OP or anyone else is wrong for accepting it and of course not her fault the system is like it is.

Ok to try and give some practical help. If you are on the lower tax rate you save approx £900pa on childcare vouchers. If your current childcare costs is £10,000 under the new scheme you will get £2,000 so are better off under the new scheme.

If both you and your partner are lower rate tax payers and both have vouchers you save approx £1800pa. If your annual childcare costs are £8000 you will get £1600 under the new scheme so are better off under vouchers.

The savings for higher/additional rate are around £600pa if you joined after 1 April 2011 and £900pa if you joined before.

You need to consider current and future costs as for example mine drop early next year making childcare vouchers the better option.

Remember once you leave the voucher scheme you can't get back in.

I should quantify those figures by saying that is if you take the maximum amount of vouchers you are eligible for.

As I understand it:

The original scheme was a true tax break and you could pay a certain amount of childcare out of gross income, with the effect that higher rate tax payers could save much more than lower rate tax payers. The current system has eliminated this element, and the new scheme still benefits higher rate tax payers at the same percentage rate as standard rate tax payers.

The current scheme doesn't pay out if you didn't pay tax. The current scheme will benefit you if for some reason you earn below your tax allowance. (although I guess in most of those cases you'd be better off claiming child care element of WTC instead?)

The current system will pay even if you're a multimillionaire. The new scheme has a cap on earnings - it may be higher than some people like, but it is at least a cap, which wasn't there before. I assume £150,000 was chosen because that's the additional rate threshold, so it's easy to work.

The current system pays out even if you have a SAHP and do not need childcare in order to work. Since the rationale behind a childcare tax break was that it was reasonable to be able to pay for necessary costs of working out of pre-tax income (up to a point), this seems reasonable to me. So again, the SAHP of a Premiership footballer could claim on the existing system.

As I understand it (and this needs checking because it's not flagged up in my Googling but it seems like a pretty big deal) the existing scheme can pay out twice as much for a double earning couple as for a single parent, whilst the new scheme pays per child, rather than per parent, so single parents aren't disadvantaged.

The clincher for me is that the ability to make use of the existing system is a total lottery at the moment, depending on whether your employer happens to be large enough to have signed up. Only a relatively small number of parents ever claimed. The new scheme is available to all working parents, including the self-employed.

I'm sure there are disadvantages to the new scheme, feel free to add them below, but overall I think most of the changes are for the better.

Yes you can claim for an OFSTED registered nanny, but you always could. The fact that someone has chosen the eyewatering expense of employing a nanny doesn't make them less worthy of assistance than someone who's chosen a nursery which might be just as expensive for multiple children. One advantage of all these schemes is that it gives people a bit more incentive to employ a nanny legally with all taxes and NI paid, rather than paying them less under the counter in cash as many many people do.

Here's the MSE page for a bit more detail.

Can you get childcare vouchers in one year and use it in the next year?