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?

In the case where one spouse works and earns £110k while the other spouse doesn't work, this makes some sense to me as they don't need nursery for childcare (assuming non-working spouse's health reasons don't mean they can't care). If the 2nd spouse worked FT but on a NMW for example, that's where I think the sole threshold feels unfair vs 2 high earners on £85k each.

They have a few children and my friend has a lot of medical appointments/ days when she really struggles health wise. So their youngest does go to nursery part time.
It's more unique than just not working.
Anyway. I think we all agree the whole set up needs to be faster

Fairer not faster ...

You need to use your ISA allowance and pension contributions to get it under. Also charitable donations are not taxable income so we put some into that.

We do this to keep DH at 99,999. Includes bonus so we have to factor that in.

I really don't earn much (public sector!). Having it based income is ridiculously unfair and sexist as it screws the lower earner (usually a woman) by making them work just to pay childcare.

I’ve got a feeling you also need to include taxable benefits like health insurance if he gets those at work too.

Yes, you do. If his only income comes from his job, it's his salary (which sounds like it's bang on £100k OP?), minus pension contributions, plus taxable benefits like private health insurance.

I'm not sure why you've come on a thread asking for practical advice to have a pot shot at someone.

Loads of people who have a joint income over 100k get free hours.

My friend who is a single mum of twins had to pay for two sets of childcare because she earned 110k. Meanwhile a couple who both earn 95k (190k joint) would get free hours.

I'm very happy for it to be means tested but it should be fair.

Where did the OP mention her outgoings being expensive holidays or flash cars?

Lots of my generation (with young kids now) have huge mortgages so a large chunk of outgoings is that.

Yes, the practical advice asked for seems to be how they can manipulate their earnings to get free hours. OP works too. This is unethical

No it’s not unethical, it’s a workaround for the ridiculous system that heavily penalises earners in the 100-125k bracket, more so than 125k+ which is very unfair. The tax system needs to be changed to stop the 100k cliff edge and then people like me will happily pay the extra tax instead of paying extra into pension to ensure I don’t end up worse off for earning more money!

@Allswellthatendswelll ISA contributions don’t impact your adjusted net income.

@Pinkissmart its not unethical, it’s common sense!

These are people earning 100k not billionaires moving their money abroad to avoid paying any tax 🙄
They've done bloody well and likely worked really hard to get where they are and will still feel like they have no disposable income for savings etc at the end of the month. This whole notion of someone earning over 100k is to be disliked and called unethical is nonsense.
Actually they will pay a lot more tax than someone earning 30k, will not be claiming child benefit and so contribute quite a lot to the government already. But guarantee if poster was earning 30k and asking for financial advice you'd be all on board for helping them.
Give your head a bloody wobble woman.

Well I for one can’t wait to retire at 58 for “manipulating” the system!

I am well within my rights legally and morally to move money to my pension. I would much rather 25,000 extra in my pension pot than giving the tax man 15,000 of it!

Don’t try and guilt trip people, when I am sure you buy from large cooperations who do anything to avoid tax!

I have just had a payrise meaning my bonus may take me close to the 100k limit if we include the health insurance benefit in kind. I hadn’t realised that was taken in to account, so appreciate that being flagged.

The cliff edge at 100k is so much more significant for parents of nursery and school age children, ie losing access to tax free childcare and funded hours on top of the loss of the personal allowance. The country needs to be encouraging people to have children to ensure we have a future generation of tax payers.

If you live in the north on a minimum wage job with cheaper housing, it’s beyond comprehension what earnings of 100k looks like, but with huge mortgages, expensive commutes and large nursery fees, those earnings don’t go as far as you think.

@MidnightPatrol yes I think you are right about ISAs.

OP you need to look into how much more you can put in your pension.

@LiftyLift exactly if one of you earns 100k you are usually going to be in London/ commuter belt and paying those prices!

The salary is all relative too.

As others have said depends where you live, mortgage, other children, other necessary expenses.

£100k in London is not much at all. £100k in Leeds is a lot more.

Our mortgage is eye watering. We don't live in a massive house - 3 bed terrace in the south (not london) - we just bought our house right before interest rates went mental and our fixed ran out at their peak. Bad timing.

Please can you explain this a bit more - how do you work out the value of private health insurance to add to your income? I've been using pension contributions to keep below £100k for the last few years, I didn't realise that health insurance counted. Worried that I'm now going to have to repay a shedload of preschool fees now!

Pension contributions need to be via salary sacrifice so that your gross pay is reduced.

Please can you explain this a bit more - how do you work out the value of private health insurance to add to your income?

Sorry, I'm not an expert. Your employer should know, or if they've given you a P11D form it should say on there. That would be an annual form.

Pension contributions need to be via salary sacrifice so that your gross pay is reduced.

No, they don't need to be via salary sacrifice. Contributions to a private pension count as well, but you'd need to report it to HMRC.

Thanks all for your advice on this, could anyone elaborate more on how to work out the value of private health through your employer?

He's over the cliff edge, for someone with children you lose out between £100k and I think it's £120kish? Ie you're worse off than being just under £100k for a while. I agree with others, might be worth him looking into how to bring that down a bit via pension contributions etc as you'll actually be better off as a household (ridiculous I know).

From your OP it sounds like your husband's salary is bang on £100k?

In that case, unless he's really neglecting his pension, I'd be surprised if any health insurance brought his adjusted income back up to £100k after pension contributions are taken off.

It's more an issue if someone's pension contributions bring their salary to just below £100k, and health insurance (or other benefits) might tip them back over £100k.

But either way, his employer should be able to tell him the value of health insurance and any other taxable benefits he gets.

The employer will be able to tell him the taxable benefit value of his health insurance. It should also be on the P11D at the end of each year (if his payslips are online now the P11D will be there too).

This thread isn’t about managing a pension, it’s about getting free childcare hours. A system which is already incredibly stretched and dependent on people who earn a pittance for the job they do.

Well yes, the government should adequately fund childcare hours, but the funded hours are paid for by people's tax at the end of the day, someone on £100k plus pays much more than most- can't get that worked about them getting access to the hours really. They've probably found the rates they pay have gone up to help subsidise settings as well.

Another alternative is to become a SAHM until your children are at school. Presumable if you are struggling to pay nursery fees of 1.2k then private school is not going to be an option.
Maybe sit down and work out how much you will be out of pocket overall if you work, pay nursery fees and are not eligible for help compared with the savings you will make not using a nursery, along with all the other costs of working.

The 30hrs was originally introduced to encourage women on low income back to work. Nurseries use the top up fees to make up the shortfall from inadequate funding via the system. Despite receiving funding you may still be paying significant fees for the hours not covered.

Twenty years ago I was paying over £40 a day 3 days a week. I chose to work part time because I wanted to be at home with DS, I was fortunate to be self employed. DS was privately educated on a household income of well under 100K. It’s a matter of tailoring your lifestyle to fit your budget.

In my line of work I see a broad spectrum of the community. Interestingly it’s the wealthy who moan the most about paying for our services, are late payers and are always short of money.