New Funded childcare hours - 100k limit?

[Diamond345]

Hi all

Is anyone aware of the limits of getting the funded hours? DH recently got a new job with a 100k salary, we pay £1500 a month on nursery which is a real stretch for us, due to mortgage, bills and other outgoings.

I appreciate that we are fortunate to have a higher salary in our house, but feel like with DH new salary we are loosing out massively as he is just on 100k so I'm not sure if we can still claim or not.

If you are bang on 100, does that count or is it only above 100k?

It’s an expected income of over £100,000. Pension contributions and a few other limited expenses don’t count. It may be that it’s worth him increasing pension contributions, although if things are very tight even at £100k, you might not be able to afford that in the short term. You’ll need to run the numbers and see.

Do you know if it's before or after tax and does it include annual bonus?

Deleted due to waffle!

So, only one income is 1500? Presumably you have an income too?

It is gross income so before tax and includes all of his income not just employment income so will include salary plus bonus, benefits in kind plus any other income you might have such as interest or rental income. Pension contributions can be deducted

@Pinkissmart the £1500 is the nursery bill, i have an income way under 100k.

I thought each income is counted separately? Is that right?

Yes it’s based on individual income.

as per pp. it’s total income for that individual, so bonus, basic salary, benefits in kind. Plus any other income (savings interest etc), take off the pension contributions. That’ll get you your net adjusted income. That net adjusted income needs to be under £100k (even if £99,999.99)

I know this juggle well 🫠

Just make sure he pays into pension. Total salary minus pension contributions.

is there any possibility of him getting a bonus? Is there a car allowance to consider? I’ve got a feeling you also need to include taxable benefits like health insurance if he gets those at work too.

Yeah similar situation here. You lose child benefit with 100k salary as well.
You will get the universal funding from 3 years old though.
Pension contributions are a way to lessen it, although I expect the October budget will be taking pension relief away or lessening it.

Have you heard about taking pension relief away specifically in relation to childcare? We’d be totally screwed without it

@Flossyts i hadn't heard of it, how does it work? Does your employer let you increase your contributes in certain amounts

No not heard of that, just around tax relief and pensions generally. I could be wrong but the money has to come from somewhere.

Sorry - I wrote that in a completely confusing way. You mentioned the budget in your prior post taking away pension relief. I wondered whether you meant generally or specifically in relation to the free childcare.

im really losing it today- not even replying to the correct people 🤦‍♀️ sorry! My other post clears my other confusing post up I think!

You can do pension contributions to reduce under the £100k. I'd suggest that you probably could reduce your outgoings to afford the nursery on such a high wage (especially as you said you work too). We managed to afford two children at nursery on about £50k between us per year. Of course expensive holidays and flash cars didn't happen but you need to adjust your outgoings accordingly with your expenses.

How depressing that in a household income of over £100 grand, you are working out how to get funded hours. Shame

It needs to change.

Myself and my partner jointly earn just £100k but not individually so doesn't impact me but I have 2 sets of friends.

One set, dad earn £110k mum doesn't work (health reasons and young children) No free hours.

Second set, they both earn £85k and get free hours.

Make it make sense for god sake!

Also we are massively struggling at £100k ish jointly and free hours still. Absolute shit show

Ideally it would change so it was tapered rather than a cliff edge. If it changed to joint income rather than individual being taken into account, the minimum earnings requirement ought to remain - families where one parent doesn’t work or works very few hours do not need it (beyond the universal 3 year old entitlement).

If she doesn’t work they are not entitled to it regardless of his income.

It’s expected to next year, labour committed to continuing the review that Martin Lewis has been heavily involved in, I believe. Martin himself said that most of the discussions were around making it fairer across the board, by making it a £100k household limit rather than individual earners.

I don’t imagine it’ll be confirmed anytime soon but given nurseries cant cope and the government is bleeding money, I’d make sure any plans to temporarily take his income under £100k to qualify can be reversed if you’d need them to be.

Actually I think her illness is classed as a disability so they would have been eligible.

Regardless, anyway, it needs to change and actually be fair.

Oh and my two friends on £85k each openly admit they don't need free hours. But they take it because why wouldn't you!

You can still get 15 hours of your child is 3, regardless of how high salary is. But like others have said, if he's bang on 100k he could pay extra pension contribution. I'm pretty sure the 100k limit includes a bonus though so it might not be possible if he gets a big bonus.

If they make it a £100k household limit rather than a £100k individual limit, it will cause a crisis among the middle classes.

2x£50k salaries is about £6,000 a month. Affording two children will become all but impossible for many, particularly in the south east.

All that does is move the insane tax threshold to even lower earners. Hit £50k and you might have a 50%+ tax rate inc student loan, lose several thousand pounds of childcare support, no child benefit etc.

We have a massive problem with families being unaffordable and the solution to that is… making it even worse?

It's before tax and includes annual bonus and other taxable benefits e.g. health and dental, car etc, but is after pension contributions.
We do a salary sacrifice where we pay more into our pensions before tax, to get us under the threshold enough so that we qualify for the funded hours and tax free childcare, but still enables us to meet our bills and financial obligations. It does feel a stretch at the moment but in the long run, when we retire we'll be grateful!