Child care schemes for higher earners?

[FTMaz]

Hi everyone,

Ive seen a similar thread to this which received a lot of hate so before I start please do not think I am looking for loop holes or to be dishonest I am looking for genuine schemes/ incentives.

my son is 1 year old and due to start nursery the end of April. I am returning to work part time earning 34k (total wage this has already been worked out pro rata). This is on an employed basis. My partner and I are not married but we live together. He is self employed and earns upwards of 200k per year including dividends. I have looked at the free nursery hours for working parents and based on my partners wage we are not eligible - fair enough. However does anyone know of any other schemes or incentives for child care that apply to those earning over £60k. I realise that we are in a privileged position, however my understanding is that these schemes are to allow people to work and it seems that for me, given the wage I will be earning it may not be financially sound for me to do so albeit I am returning to work for non financial reasons (I work with serious child protection cases and feel that currently I am not using my skills which are valuable).

thank you for replies in advance!

I don’t think you’re unreasonable, but there a solution that I’ve mentioned. It’s just if you think you’ll benefit for your husband to reduce his hours to get the benefits now, or if you think he’ll be better staying full time and potentially earning a higher wage due to not taking time off now. It’s a common decision every family has to make. You just need to weigh up the benefits. Sadly it seems it’s only women who seem to do this, like you have in going part time. I didn’t go part time, I’m happy with our childcare set up and we’ve both changed roles to be more flexible around nursery/school, and have benefitted for the breaks the government allows. There is always a bit of compromise, your husband needs to do his bit! Mine has and the bond our children have with him and sharing the mental load means we are a relaxed happy family!

Yes I agree.

people also assume that if you have a high household income you are looking to pillage an underfunded state system with no regard to the tax that is paid into that system. I think they feel you have no understanding or empathy towards those who truly NEED the support as you say which in my case could not be further from the case.

we also still live in a world where men are normally the higher earners in the household and for me the current scheme discourages women with useful skills - often in the public (namely heath and education) sector getting back to work.

But surely benefits are about who needs them, not who is paying for them? I don't see me as being "excluded" by schemes that allow universal credit claimants to redeem 85% of their childcare costs, despite me paying higher rate tax and therefore funding it. These things can't be given to everybody, irrespective of whether they need it or not.

If you move to Scotland the funded childcare (from age 3) is not means tested

I don't think anyone is resenting your income just saying that public support should be directed to people who need it not people who have a relatively huge household income and can easily cope without financial help

I've edited my post because I wasn't having a go at you at all . No sheltered life here 🤣👍 I paid half my wages (less than half of your income) on nursery fees so i could do my low wage part time job and it is really shit.

Hi
thanks for this. My partner owns his own company and takes dividends, unfortunately it’s not an option for him to reduce his hours. I have spoken to him about speaking to his accountant for next year. Part of the issue is the mortgage on our house is very high as we maxed out to afford the house we really wanted. We are looking to remortgage but there are limited options that take business earnings into account rather than personal earnings so as you say we do need to look at it properly to decide if taking a hit on the income is worth it or not.

Oh sorry. Yes as I said I do recognise I’m in a very lucky position and having grown up in not such a lucky position I do truly appreciate it and don’t resent anyone getting support x

NHS access and schooling is available to everyone regardless of income, why not access to nursery care?

And childcare is presented in the UK as another universal benefit - part of the social contract. Households with £198k of income aren’t desperately in need vs households with £202k of income.

The value of the lost childcare is high - particularly given those excluded will be paying tax rates of 47-62% on that income too.

Childcare support should be universal, it’s really petty of the government to give parents no tax relief on using childcare to enable them to work.

Yes I’m well aware we can cover the fees - just wanted to makes sure I didn’t miss anything

But...why do you care?

Someone upthread said that your household income is £139k a year net...so £11k a month, ish.

If your childcare costs are £1k, tax free childcare would save you £200.

£200 out of £11k? Can't say I'd be particularly bothered about others getting it being 'unfair' tbh. Seems a bit like scrabbling down the sofa for a quid in change when you have £100 in your pocket.

If he owns his own company is the 'paying' himself 200k a year?

Your partner could do with speaking to an accountant re his income.

He should be max funding his pension and also include you as salaried staff re part time admin or something and fund pension for you too. 9 times out of ten it will be more tax advantageous. It wouldn't resolve your childcare costs but it should ensure your joint income is working best for you both.

Childcare support is severely underfunded as it is. Childcare settings were already closing at warp speed. It’s just going to get worse now with the roll out of extra hours. It was a broken system from the moment is started. To roll it out universally would have such a huge burden that, not only would the tax payers pay huge amounts, settings carry on closing in droves and it would likely be the end of PVI childcare, the hardest hit will be the vulnerable families who desperately need it.

No worries, it's such a sensitive subject.

I kind of looked at it as I am quite lucky to not earn a massive amount because we manage to get by on it, and because my job is part time and flexible i can do the school run and go to assemblies and volunteer for trips. If you have a job you find fulfilling and worthwhile maybe just look at it as a cost of maintaining that (again it doesn't feel good having to fork out each month). The nursery paying years are horrible but they do pass in the end.

Can he bring his income below £100k by not drawing dividends for the time being and maxing out his pension contributions? Otherwise you just have the 15 hours once your child is 3.

I don't understand why people begrudge high earners free childcare given that they also pay vast sums of tax.

I'm an additional rate tax payer and cheerfully claimed the 15 free hours once my child was 3. Why shouldn't I? I pay eye watering amounts of tax, and am much less of a drain on the state than most people e.g. my family doesn't use the NHS, we don't receive benefits etc.

I agree about the single vs dual income thresholds for sure. And agree that in an ideal society childcare should be universal, but it unfortunately isn't and funding needs to be prioritized. I'm ok with the idea that I'm funding something I'm not fully using, as I can afford the costs.

@Daisytails ruling out universally wouldn’t be expensive, given it’s a (relatively) small number of people effected - and, means it would no longer require any means testing.

I agree the extra hours present an issue for settings. Many round here don’t offer the extra 15 already.

All parents should be eligible for a significant degree of tax relief on their childcare however, it’s basically a business expense to allow them to work.

I can get tax relief on a bicycle or a car - yet not a penny on childcare. It makes no sense.

So… sort of, and I have no issue with funding more to eg very low income households.

But removal of childcare support at £100k is incentivising some very (rational!) but probably negative behaviour. Childcare isn’t necessarily affordable at that point either - two nursery places could be 80% of a £100k salary round here.

If people are avoiding promotions, stuffing money in pensions, doctors not doing extra shifts etc - all because of access to childcare support, that’s not a positive.

And it’s exactly what people are doing - if you earn anything up to £160k and have a child in nursery, you’re best off getting your income below £100k.

It creates the highest effective tax rate on earth.

The whole scheme is batshit crazy. I'm not in the least adverse to high earners paying for their own childcare but the cliff edge around £100k and the perverse incentives it creates, together with income being measured per earner rather than per household, make it truly sloppy, backwards and indefensible. I realise there is probably little incentive for politicians to reform the system as only (relatively) high earners are affected, but the whole thing is a complete dog's dinner and a good example of the intellectual laziness of those who are and have been in government. We all deserve better, not necessarily because we're personally affected by it but because we all deserve to be governed logically and sensibly and the scheme in its present form is anything but.

The system is admittedly ridiculous but perhaps not in this OPs case. I went back part time after little one, and had the 15 hours childcare for a term, but I didn't earn enough in an equally worthy field (because I was paid based on quantity of work, not hours taken), to be considered eligible as a 'working parent' and so I had to pay full price for the childcare I needed in order to do said work. I basically didn't earn enough money to get free childcare and had to pay for it. But unfortunately the rules are the rules, and if I don't get a loophole then I don't personally think you should either 🤷🏻‍♀️

Why doesn't he just keep his money in the business and not pay dividends for a couple of years until your child is at school? Or make you a part of the company and pay you some dividends? If either of you earn over 100k you won't get any help with childcare but if you both earn 99k you unfairly will do

I don't think you should necessarily get free childcare at this income but you should get the 'tax free' element (but you won't unless both under -00k)

The problem is, the hours are already so underfunded, stretching them out to more families won’t help this. It’s not the hours that are the problem, it’s the money that is paid for the hours. Making childcare support universal, aside for the universal 15 hours at 3, will just cause more settings to close meaning less spaces for children overall. If you make childcare support universal should other things be universal too such as universal credit?

It does feel a bit frustrating to pay so much in tax and not get anything back.

Honestly in your situation I would get a nanny until the child is 3. If you are going to pay a fortune you might as well get better quality care.