New childcare tax break to be announced by the Government today - what do you think?

[JaneGMumsnet]

David Cameron and Nick Clegg are due to unveil new childcare plans in a joint press conference today, with further detail expected to follow next week.

According to reports, families could be entitled to claim up to £2,000 per child every year from their tax bills, to cover the cost of childminders and nurseries as part of a new government scheme to help families.

The new measures will not be means tested, and will replace the current voucher and allowances scheme.

We'd be interested to hear what you think of these proposed changes, particularly in the light of the changes to child benefit which have been implemented today.

Thanks,

MNHQ

[AnnieLobeseder]

So basically they're just scrapping the tax break that working parents of school-age children get. A huge step backwards. Why the heck don't they just make anything paid on childcare tax-free? Wouldn't that be far more fair and simple to implement? I'd happily do my own assessment if I could claim back the tax on the thousands of pounds we pay for childcare.

[AnnieLobeseder]

It's still amazing to me that you can claim a chauffeur as a work expense and claim back tax but childcare is left out of the picture.

[concessionsavailable]

OK so at the moment DH and I both claim £243 per month of vouchers. That totals £2913 each per year, £5,832 between us.

So this looks like a cut in our eligibility?

Wouldn't be the bloody first cut. I am feeling screwed on about ten different counts at the moment.

First, the total is a pittance compared to the £9,486 which we pay for the baby for a three day week at nursery (£62 a day). Then there is the cost of before and after school and holiday care for DD1 (no family help).

(Childcare costs crippled us so thoroughly that we left a 4 year gap between our two children so we would not have two in nursery.)

Then the childcare voucher rules were changed so DH, as a higher rate tax payer (just), would have to leave the scheme if he changed jobs and rejoin at a much lower rate.

Then, the nursery we hope baby will go to when over 2 decided to use the fact that DH was a higher rate tax payer to double their fees. (Council nursery).

Then I am on maternity leave at the moment and all the groups I used to go to with DD1 have been closed down due to Council cuts. They are replaced by private groups at £8 a throw

Then we lost our child benefit.

Commuting, energy and food costs are through the roof, and the baby has to stay in our room as we physically cannot fit a single bed and cot in DD1s room (London housing costs), but at least my parents and PILs are happily holidaying two or three times a year from their four bed houses and enjoying their WFA, massive housing equity, TV license etc etc

If this sounds whiny, it's because I feel whiny, frankly. Watching Gideon Osborne crow about giving up his child benefit, when he is on a huge salary, plus trust fund, plus made so much money selling the home the taxpayer funded the equity in... AAAAAAAAAARGH.

Cheers you fucking Tories.

[AnnieLobeseder]

The comment on that Torygraph article are sickening. Loads of "why should the taxpayer subsidise your nursery place, you chose to have children", "women should stay home and look after their own children", "don't have children if you can't afford to put them in nursery" etc etc. Do these people realise we have the highest childcare costs in Europe? How narrow-minded and idiotic. Working parents pay tax. Nursery employees pay tax. Children are the tax-payers of the future; getting people into work through affordable childcare benefits everyone!

[MmeLindor]

I would really love to see the figures on scrapping the whole voucher / tax credit scheme and investing that money in subsidised childcare.

Childcare in UK is horrendously expensive, and we have comparatively low wages and high housing prices.

For lots of women, this means not being able to work, as it costs them more to commute and pay for childcare than they can earn.

[concessionsavailable]

Just in case anyone reading this quickly doesn't know how childcare vouchers work, I sacrifice £2913 of my salary and it gets turned into vouchers which are sheltered from tax. If I leave my job, any that I have accumulated (for example, while on mat leave), go poof.

It's an idiotically designed scheme but even the small amount of tax relief it gives us is massively welcome, at time when we're feeling completely screwed over.

I remember trying to explain to a Spanish friend my childcare costs. She practically fainted.

[drcrab]

frankly, I think whatever they offer at the moment, we will all lose out. I claim the maximum £243/month and my nursery still takes about £600/month from my bank for fees. I look forward to the day when my daughter is out of nursery...(it's great btw, it's just the fees which are mindblowingly expensive).

[AnnieLobeseder]

I'm often amazed by people who get vouchers but don't realise they're not actually saving £245 a month by using them. You just don't pay tax on that £245. So you only save about £49 per month on a 20% tax rate, which is £588 per year. £2000 is loads more than that, BUT, if it's only for under 5s it will be a huge blow to working parents of school-age children.

[thereonthestair]

I think there may be some advantage in this, although it will all depend on the detail. However for those of us who are self employed it may be good as vouchers depend on employment and childcare is not tax deductible.

[Glittertwins]

Our two are now out of nursery. We both work and are enrolled in our employers' childcare voucher schemes as after school / holiday clubs are needed. Has there been any mention on over 5s yet?

[NorthernLurker]

I agree that if you could simply either use childcare vouchers OR get tax relief on money paid for childcare via self assessment than that would actually be helpful to families. They could chuck in tax relief on money paid for university tuition too - now that would be a vote winner!

[concessionsavailable]

You're right Annie. They clearly don't look at their payslip. It also means people tell me that I am saving nearly £3k a year, erm, no I'm not.

[AnnieLobeseder]

Has anyone got a link to the part about there will be a change on claiming for over 5s, or is it just hearsay?

[notnagging]

If it is true it will be good news but I suppose it depends on what they take away to pay for it!

[minderjinx]

Does anyone know when the announcement is expected or where the details will be published?

[notnagging]

"Rules could also be relaxed so that nursery staff can legally be in charge of more children, The Daily Telegraph understands. This could see nurseries expand and bring down bills for parents."
They are really not living in the real world if they think nurseries will bring down their fees.

[3birthdaybunnies]

The other problem is that if it is a tax break for the person claiming child benefit, does it assume that they are earning more than their personal allowance in order to earn enough to pay tax to be refundeed?

Under our current situation I only work 5hrs a weeks (and we juggle childcare), were I to say double my hours I would probably just be under the personal allowance levels, but would need childcare for ds. I wouldn't however be eligible for the tax break, however under the existing scheme dh could have claimed childcare vouchers, saving a significant amount. At the very least the person claiming CB should be able to nominate their partner for this tax break.

Also if it is not means tested, what about all those people earning over 50k who have deregistered for CB will they be eligible for this or not.

As ours are all either at school or preschool this would also have a significant impact if we were to put them into holiday club if they have the cut off at age 5, an age where lots oof previously SAHP might have been wanting to go back to work, this will be a disincentive to that group of parents.

Well done tories, yet another poorly thought through policy, if a bunch of parents on Mumsnet can see problems already why can't the people who are being paid to run the country?

[AnnieLobeseder]

"Well done tories, yet another poorly thought through policy, if a bunch of parents on Mumsnet can see problems already why can't the people who are being paid to run the country?"

^^this

Why isn't Mumsnet running the country? Seriously? We'd rock at it!!

[MerryCouthyMows]

Not going to help people on NMW Part Time, is it? As they are below the Tax threshold.

All the voucher schemes etc seem to be aimed at high earners - but people working PT for NMW still need to use Nurseries.

OK, they currently get help with the costs through TC's, but that's going to drop significantly once Universal Credit comes in, as it will be counted in the cap, as an element of UC - so the lowest paid will lose their Child Benefit if they work in order to have help with their childcare.

This government is all about helping those on semi-decent wages, whilst hammering those on very low incomes.

[latebreakfast]

All this will do is push up the cost of childcare and hurt those on lower incomes. Crazy.

[MyNameIsInigoMontoya]

I suppose it would be good for childcare tax breaks to be made available to those parents who can't currently get vouchers - as only certain employers make those available.

But reducing the benefits for people who currently get the vouchers seems like a bad idea, and would potentially discourage some people from working if it meant their "childcare costs vs. money coming in" equation got worse.

It's not clear from that article who the tax breaks would actually go to, it said "mothers" but that may be an assumption of the journalist rather than the actual policy. I would expect this would need to be available to single working parents of either gender, and to couples where both parents work and who need paid childcare to cover their overlapping work hours. But not sure how they would decide which parent within a couple should be able to claim the relief.

A cut-off at 5 years would also not be ideal, and again significantly worse for people currently getting vouchers (though better than nothing for those who don't get them).

[NorthernLurker]

There's always going to be an issue if you change from a system where the saving is up front - as with vouchers - to one where the saving is postponed as I assume it would be through the tax system? Presumably the tax relief will be given retrospectively as if you gave it in advance and the childcare costs changed a person could end up owing HMRC quite a lot of money........

[TwelveLeggedWalk]

In two minds here.

As self-employed mother of pre-schooler twins the notion that I could finally start claiming some tax relief on our frightening childcare costs is tempting, and it would mean that I took on more work, pure and simple. So that makes sense for the economy.

But a lot depends on the detail, I don't agree with an under-5 cut-off, and the 'Mother's' pin money' connotations of some reports on this make me quite ragey.

[TwelveLeggedWalk]

And thank you Annie for breaking down the tax relief benefit of the pointless voucher scheme. I was getting a bit confused otherwise reading some posts on here.

What do you save as a higher rate tax payer eligible for just £124/month? I'm crap at maths