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

With the childcare voucher scheme... Which I thought was pretty straightforward I have £160 taken off my monthly wages to create vouchers. This pays for DS's nursery (he only goes one day a week).

So basically this will have no effect on me as I already get his full childcare costs tax free.

Am I right?

Vouchers are not availbale to the self employed like I am.
Full time daily nanny in London for 3 children under is going to cost you not much less than £30k so about £50k of before tax income if you include employer NI, employee NI and tax for the nanny so if they allow £30k against your tax at the highest rate that might help. However they aer going to allow a sum which bears no relationship to London costs again as they want London to subsidise the idle regions as ever and tax people in London in effect to the hilt. £2k a year is a joke. I would rather have very very low flat taxes and a much much smaller state. Roll on Russia - we can see why the French are going there - 13% tax.

Well jolly the tax and NIC you save on that £160 is 32% of that I think (ie 20% tax, 12% NIC). So that makes it £51 per month of tax and NIC you save, or £614 per year.

Under this new scheme it depends are they going to take the £2000 from your taxable income (like they do now), or are they going to take it from your tax bill. As a lower rate earner, the tax / NIC on £2000 would be £640 so for you the effect would be marginal they are reducing taxable pay by £2000. On the other hand, if they reduce tax bills by £2000, you'll be better off.

And it looks like only one partner could claim... so to be honest I think it'll work out pretty much exactly what the current scheme does if both partners claim vouchers.

Thank you so much, Tincle :)

This proposal only seems to be for funding for childminders and nurseries - what about nannies?
I have a nanny for my twins for various reasons, one being that neither DH or I could actually do our jobs if we had to work around inflexible opening hours, but also because its more if less the same cost as two nursery places. Looks like we won't get any assistance towards this. Having just lost child benefit in full as well - it's been an expensive start to the year so far.

The current system of vouchers I find very clumbersome. I have to guess how much I'll end up paying in childcare (which varies) and then claim it, and then print of vouchers each month to pass to the after school club. Some holiday clubs take them and some don't. And lots of parents work for employers who don't offer them. I used to claim tax credits instead so didn't get the vouchers - meaning that they mainly subsidise the better off, as lower income households claim tax credits instead.

The government needs to simplify the system to make it simpler to pay for childcare, or just subsidise the suppliers of childcare to make it cheaper.

If only one of us could claim, and that being the max of £2k, that would leave us quite out of pocket compared to our joint current sacrifice of £4.4k pa

ceeveebee - I can't see how they could limit it to only childminders and nurseries... I would suspect it would be like Childcare Vouchers: for all registered providers. However they could decide to drop the registration of nannies (in England) and nanny agencies (in Scotland), so maybe they could limit it.

Details have not been published, so until they are we won't know.

Unless it was 2k off your tax bill glitter, in which case it would be much better

TBH it is impossible to comment until they release the detail.

But if it is £2k per child, then we would slightly out of pocket...if there is nothing at all and everything for the over 5s is canned, we are significantly out of pocket coupled with CB loss.

I agree Tincletoes, just have to wait it out.

Interested to see detailed versions of this proposal - like a lot of people I'd like to see more affordable childcare in general. I think my childminder is amazing, she has kids of her own, she is qualified in phonics and creating a learning environment for kids, she cooks my DS great meals and he's very relaxed and happy there so I don't begrudge paying her £4.50 an hour. Next year when I have two DCs though I'll be paying £8 an hour in childcare and like a lot of people I get no tax credits any more since they raised the threshold.

Me and DH, even with decent(ish) jobs, do really struggle with mortgage (on a house in negative equity), living expenses, childcare, petrol costs month to month, and even though we rarely go out, don't holiday abroad and spend hardly anything on ourselves we have absolutely no savings. It's a nerve wracking way to live and it would be nice to see a government proposal that genuinely rewards parents who work and have to juggle their lives around that - which is not in any way to say that SAHMs should be penalised for staying at home, just that medium income families could do with a bit of support instead of constantly running like hamsters on treadmills trying to keep everything going, paying our rates/national insurance/taxes and getting little in return.

Having thought about it.... Surely there's not a chance the govt can offer us £2000 of our tax bills. That has to cost them too much money.

For 2 parents both claiming vouchers it costs them £1866 though... I suspect this is why you will only be able to claim for preschoolers... It is completely to counteract people like me and my DH (who earn a combined income of greater than 50k) who argue that losing child benefit is a hardship when you are paying more than 800 a month in nursery fees.
Totally agree overall we'll all lose out as after school clubs so expensive.

TBH the more I think about it the more politically devious this all is!

When you add up before school club, after school club and the hugely expensive holiday clubs, then it isn't that much cheaper to fund childcare for school age children. That's why so many families juggle at least one end, ie drop off or pick up between them. I cannot believe they are imposing yet another cut on working families and passing it as a benefit. Words fail me!

So if this measure was as well as vouchers it would be a great idea - people like me who are self-employed would benefit in the same way as people who are employed by companies that offer vouchers. But because it's instead of vouchers it sets up this whole argument. Why is the coalition government quite so rubbish?

If this is replacing childcare vouchers, is per family rather than per parent, and only for children under five, then it looks like a pretty serious cut for a lot of us, not a "new tax break".

NotAQueef, i think your DH should be taxed on anything over the £243 per month as a benefit in kind, although it may be that the NIC isn't due (not sure). If the scheme allowed, say, £1k pa for health insurance or £500 for gym membership as some of the flexible benefits, they too would be taxable.

I am annoyed there's no detail yet so can't start any planning until there is.

Yes, it is becoming significantly stressful not being able to budget properly because of the constant changes and rumours of changes.

Im so confused by this really am.

went back to work fulltime after eldest in 2007 for some reason I wanted to ensure i was settled before arranging childcare vouchers through my work as seem quite complex. My husband working fulltime too did it his side full amount £243 so I thourght they took 160 salary from gross and then paid nursery £243 in vouchers the i paid hubby 160 cash.

I then moved employers and dident get round to sorting it out through them .

I left work as we both worked fulltime, no family nearby . by time paid 800+nursery commute was left with £300 net , hardly saw hubby and missed out on lots time with my child.

We still kept on nursery for 1 day a week as she as settled , had freinds was good for her devlopment the 15hours funding term after her 3rd birthday helped at we stopped nursery and just did preschool-term time only.

She started school 2010 breckfast clubs £2.50 and after school clubs £7 I know one mum working with 4 and was paying for all 4 so £9.50 each a day 4*9.50 a day so £38 quid a day £190 a week she was full time but newly qualified secondry teacher.

I know people who use vouchers for explore learning centres as we considered that.

The breckfast club started at 8 too late for some and after school 5.30 too early,

Our nursery only did 8-6 hardly any go 7-7. we worked in retail so no cover for weekends and bank hols.

we since had 2kids.

my 3year olds september born so wont start school until sept 2014 weird you can defer them but no flexibility start them earlier.
She does mix of nursery from 18months and started preschool in september when she as 3 they now take from age 2 but the site and small space wouldent feel comfortable starting her there earlier or her younger brother.

Im splitting my 15hours between 2settings so

1half days preschool-3sessions-term time only so free as funding only covers term time.

But nursery she does whole day 8-5.
now shes egtting funding my term time bill will be cut by half but will have defecit s funding 32 weeks a year and private day nursery

is the 15hours free for all 3year olds being scrapped or means tested? at moment its universil.

the 2year old funding seems to be targeted at people on benefits and way of educating parents dn giving child extra support so they not behind when start school its not neccesarily childcare its about sure start and their policies.

We are using childcare vouchers through hubbys work which think saves us £40 a month as nursery 38 a day and 4week month £152 anc vouchers are £160.

I have a 20month old and really want to start him in nursery but unsure where i stand as if have 2preschoolers in nursery just one day a week its going to cost me £80 day -partially funded by nursery grant for 3year old but another year half before she starts primary.

Im hoping to set up own business this year and be self employed so currently if self employed i cant use vouchers but hubby still in work can do still.

We lost tax credits april.
we keeping child benefit as under 50k.
Although i admit the 2parent anomoly with cb unfair.
Whys it all families and not oaps?

I am sahm mum but hopefully not useless.
My husband works long hours
we have no family here.
living costs rising we dont lead the high life.
I have ruined my career we have no savings we get by.
I dont go have nails done or out for lunch.
I was on school pta, im peer supporter breastfeeding group @health clinic and on preschool commitee.

Preschools really struggling for numbers as people cant afford to fund it I have last terms bill to pay of £210 as its term after 3rd birthday which is jan but they couldent hold a place.

I learnt today that someone I know similar to me 3kids married,other half working sahm is getting tax credits, housing and her net income his salary and benefits is near enough my hubbys net take home pay and his gross is 41k.

Feel like tax credits is subsiding employers and making lower earners better off than middle high earners as their salaries are topped up more and then read oh well they need free 2year old place bit irksome not their fault as thats system we have but see it a lot.
I have 3kids and know some families with more than 3kids low wage who seem to have much more disposable income.

The systems so complex I cant work it out anymore.
so many changes I lose track.
just trying to work out how it affects us.

I cant wait to go back work im not sahm mum through choice more necessity,

It makes me want to do well this year in business plans as dont want to be reliant and at mercey of the governemnet whoevers in power but would like to see greater thourght, fairness applied and like to think yes we taxed to hilt but e get something back as at moment its robin hood rob peter to pay paul all it does is

put some people on middle incomes -in higher tax brackets
make the middle poorer
If the everage wage is 26k and ctc is being capped bow at 25k then only people under 25k will get tax credits.Also gone up from 16hours to 24 when employers cant give more hour whats happened to all the mums working 16hours have they lost it?

Makes me want to emigrate for sure. Its so depressing.

Great, just what we need (not!)

I was made redundant in September, and have decided that I'll register with agencies for temping next October when ds2 starts school but will do some freelance work from home before then. Kids in part time childcare with some help from my parents and DS2 at school nursery class in mornings. My understanding is that under these proposals we might get a small tax break for a few months for DS2, but where childcare vouchers would have covered a lot of our costs for both of them from late September 2013, this won't. And we might not count as eligible for the tax break anyway, as I might not be working enough....

I also fear that having made child benefit so much more complicated and introduced unfairness, the next step will be to take it off households like ours was until September, and might be again - household income was a little above £50K but earnings were a 55%-45% split (I earned slightly more).

Grrrr.

Can someone link to where it actually is reported that this would be capped at age 5? I haven't seen that other than on this thread.

Nothing has been confirmed, it would appear that new measures are for pre- schoolers leaving us guessing at what will be scrapped for the over 5s.
Going on the track record, I'm resigned to losing everything we thought we'd claw back after 4.5 years of twins in a private nursery now things are less expensive at school.

Less expensive than nursery but we still have after school and holiday clubs to pay for.