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

[RowanMumsnet]

Hello

Many thanks for all the posts - interesting reading.

Nobody outside the government is quite sure why this announcement wasn't made yesterday - although there are some hints in press coverage today that this might be down to internal Coalition disagreement over the policy.

It looks likely that some sort of announcement on childcare funding will be made in the near future, so do please keep letting us know what you think.

[specialknickers]

Another massive con. They must think we're totally stupid... Worse than nothing I think, because whilst they're removing child tax credits and child benefit they're offering undisclosed tax breaks that will penalise stay at home parents. It's nonsense.

If they really wanted to help children they'd have state child are for all, just as they do in Denmark / Sweden, where children have high quality child care available so that parents can split work responsibilities as they choose - instead of bogus tax breaks that send yet more money into shoddy private sector nurseries, where the fees will rocket.

[jellybeans]

Great post DeGlitterBug. Totally agree.

[specialknickers]

Actually, I'm seething now. All this bullshit about "working mothers"... It's so fucking patronising. We don't hear about "working fathers" do we? No. Because its assumed that fathers work. These policies do not even use language that reflect the realities of modern life. PARENTS work. We're paying taxes and we're bringing up the next generation of taxpayers and I'm sick of being talked down to whilst this government force through more back-of-a-fagpacket policies that clearly will save no money whatsoever.

[PolkadotCircus]

Spot on Deglitter

[cogitosum]

There is quite a bit of wrong information about childcare vouchers and salarty sacrifice on this thread so just to clarify...

Notaqueef's scheme must be a workplace nursery. THese are tax and NI exempt to the total cost. Other employer supported childcare (the most common of which is childcare vouchers) is exempt up to the limits depending on rate of tax. Whether it's offered through felx makes no difffernece to the tax status, just on how your emlpoyer admnisters the scheme.

Annie you also save NI so the savings for a basic rate taxpayer is 30.6% or 32% making up to £933 a year not £588 (although still not £2000! but nearly for two parents)

Concessionsavailable childcare vouchers don't go poof if you leave or go on maternity leave (although your employer may do this). On the whole they don't expire and can be used til 1st september following 15th birthday of your youngest DC (this may depend on the voucher provider). They certainly don't when you go on maternity leave as you can continue to get the vouchers on maternity leave - and an employer who does not allow this or is contrary to the sex discrimination act. In particular the Maternal and Parental Leave (Amendment) Regulations 2002

Hope this helps!

[ThePippy]

Further to cogitosum's post about CCV when on maternity leave, the rules of any salary sacrifice scheme is that your company must continue to provide you the benefit that you have contracted to sacrifce salary to receive while on maternity leave, in exactly the same way as any other contractual benefit. The rules go further to state that your maternity salary CAN NOT be reduced/sacrificed further by your employee as you have already been on a reduced salary contractually in order to receive this benefit.

The upshot is that when you go off on maternity leave, if you have been part of a salary sacrifice scheme to receive CCV, then your company MUST continue to provide you with the CCV's while on maternity leave but your maternity pay should not be reduced. I discovered this handily a few months before going on mat leave with DC2 and fought hard to get my HR department to understand the legislation (small company, ended up getting their own legal advice) and I won. Made what was a pitiful maternity package (only SMP) slightly more acceptable.

[Startail]

I don't work and have lost my CB and as my youngest DD is 12.

I can't invent a job out of thin air, I refuse to leave a my DDs (even at 15&12) all summer in the middle of nowhere with no transport.

They get on very well, but after a few days they would had enough and I refuse to have DD1 being responsible for trampoline, cycling or climbing frame accidents especially involving the girl next door.

Therefore, the Government can Fuck the Fuck off an do what the hell it likes.

All it's bright ideas make us worse off so I no longer care.

[picketywick]

Dave and Nick revealed very little in their press conference. The "leaks" to the press were a cheat. Beware of Coalition leaks.

[Startail]

Sorry, that should read an my pension contributions as DD2 is 12.

Pension was Labour, it used to be 16
and
Child benefits is the Tories

Given DHs employers do some defence stuff the Liberals hate them.

So basically all the political parties are shit!

[DeGlitterBug]

Maybe they ran it up the flagpole, watched the reaction and realised it wouldn't fly?

[Mrskbpw]

I've not read this whole thread, and I know that the policy wasn't announced anyway, but I have a question.

I saw on the front of the Telegraph today that this would punish SAHMs because they wouldn't get a tax-break to pay for childcare. I must confess that I didn't read the whole article because I was reading over someone's shoulder on the train and I can't find it online now.

But my question is, how would you give a SAHP a tax-break? My understanding is that a tax-break is on income tax. That's how my childcare vouchers work anyway. So if you're not working, you're not paying income tax. How then - in fact, why then - would you get/need a tax-break?

(BTW I have absolutely no problem with parents claiming their vouchers and using them however they want in the system as it stands at the moment. If one parent works and the other doesn't, then why shouldn't the working parent claim vouchers and use them for childcare to allow the other parent to study, or write a novel, or learn judo or whatever the hell they want? That's not my point, my point is how you give someone a tax break when they're not paying income tax - do you let them pay less VAT?!)

[AnnoyedAtWork]

It is my understanding that the working parent would still get a tax break to pay for childcare in the same way, regardless whether or not they had partner at home.

The confusion is perhaps whether 2 earners would get double the tax break (which surely makes sense as they would use more childcare)

As they say at the end of the article, "the main barrier for women returning to work is the cost of childcare... we simply dont get stay at home mothers contacting us saying they want more money for childcare" - no 10 source

It is about making returning to work a viable CHOICE for second earners, no one is forcing you (if you can survive on 1 income)

However I don't think 2k per year tax deductible changes anything vs current childcare vouchers (it is still nowhere near enough)

[AnnoyedAtWork]

And for those whom it is not a choice because they can't afford not to both work, helping them out as they contribute to the future of our society by having children and both paying income tax

[AnnoyedAtWork]

There are situations where a couple is worse off if the second earner works due to the extortionate cost of childcare. (Or single parents who cant afford to work). That is simply wrong.

Therefore making childcare payable out of pretax income makes absolute sense. The problem is, only allowing £2k per year to be paid this way makes hardly any difference. It needs to be 100% although I understand the need for a cap it should be more realistic, say 10k per child.

[AnnoyedAtWork]

Or capped according to the local cost of childcare in the same way housing benefit is capped at average rent for the area for the size you need.

[Xenia]

Local costs woudl be better but there is very little money in state coffers so I am not holiding my breath. Cost of a full time daily nanny if you have a proper full time job and she looks ater 2 or 3 under 5s which is very common is going to be about £25k - £30k a year including paying her natinoal insurance, her tax and emplo0yers' NI on her salary. You pay that out of your taxed income.

So if you could set the £30k (some hope) off against 40% tax then £12k is from the state and £18,000 paid by you or £9,000 per parents (childcare costs are never just costs for women - men find and pay for childcare and are a full part of this issue in most equal households - real women don't marry sexist men who expect women to be in charge of children not in 2013 and not even 30 years ago). I also think this Government is going to have to drop the sexist stance it has put on this as they will annoy even libertarian flat taxes who woudl be in favour of abolition of all credits, child benefits and the like by their suggestion that Nick Clegg and other men are somehow less responsible for children even than their higher earning wives like his - Miriam G. They can woo the female vote if they avoid sexism but even here they are getting that wrong (... calm down dear). Avoiding sexism would not cost them a penny and buy them much credit but they are still getting it wrong.

[Viviennemary]

I read somewhere today that married couples would be getting a tax break. All these rumours do seem a bit odd to say the least and no announcement yesterday. It does look as if they are testing the water.

[PolkadotCircus]

I wouldn't get your hopes up think it was only £150 a year.

Highly silly,unfair and a complete waste of money IMHO.

Basically 2x 40k will now get CB,help with cc and a married couple allowance.Those of us on one income of 50-60k who have happily been living together for years get nothing.

Fair- I think not.

[caramelwaffle]

Yes, they are Vivienne and as Xenia points out, dropping the sexist language and stance would be a very, very good start Coalition Government imho.

[HoratiaWinwood]

I agree that they have been testing the waters with the rumours.

Enough of their core voters have expressed horror, bafflement and/or derision for a total rethink to be in order.

It doesn't count as a u-turn if you never officially announced it in the first place...

[takeaway2]

There are some countries where they do what Xenia's suggested...

So if someone earns £50K, and has to pay for childcare of £10k/per year, the way they'd be taxed would be first X amount free (something like £8000 now?), followed by the £10k that you pay for childcare, and therefore you are only liable for tax of 50-8-10=£32K. This would mean that on 22% tax (because you fall in the lower tax band), you'll pay £7K in tax per year, which is much better than the current system where you would have to pay tax on £50-8-(243*12)=£39K.

They even allow tax rebates on having more children (in a bid to increase birth rates), and other sorts of tax rebates.

And yes, they need to stop the sexist language and stance...!!!!!!!!!!

[mam29]

Just thourght might try clarify voucher confusion.

Back in 2011 could have been april co-alition changed the rates you could save with vouchers was less than we got in 2006 for 1st child.

My guess is if old old contract ie been in same place years then maybe that stayed same.

Like I say hubby,s always done it through his job which helped me when I was working and at home.

Also different employers use different voucher providers current one is computer share and elctronic back in 2006 was paper and not sure which provider.

So if terminate one scheme and join new employer then you have to join under new terms and conditions I guess therefore getting less.

Also not every employer offers it and always seem wrong self employed people cant benefit unless they can make childcare part of annual tax return that be good a rebate on childcare costs.

Me and husband discussed earlier as we both been employers and only management or supervisors say took advantage of the scheme no one else asked of course was advertised in company handbook. One single parent cashier 16hours said majority of her childcare was paid through working tax credit childcare element no sure if this still exists as never was eligible when working for help with childcare other than vouchers and free 15hours term after 3rd birthday.

I really hope not axed at age 5 as its really going to hurt many business, childminders and after school clubs. some schools axed after school clubs as not enough parenst working to warrent it.
Even use vouchers in nursery class of prep up until age 5.

Most people only get 6weeks holiday and school only runs for 32weeks of year so how do we provide childcare for 14weeks if no family near by.

Uses 2diffrent nurserys both private one for each child and they converted houses and wouldent space for loads of kids and become battery farmed childcare!

The childcare for disadvantage d 2year olds red herring its sole purpose is not childcare its child development.
Watched on daily politics last nite as missed lunchtime and both woman conservative and lub dem bloke men were self congratulating themselves why wouldent the middle mind the redistribution of wealth and giving their childcare breaks to family on less income than themselves. This offended me personally we stuggle on most months we not rich.

[Xenia]

What I don't like is the muddled policy. UK very highest tax rate 1970s was 99%. Even my father modestly paid state worker paid 63% upper rate and 15% on top of that on savings interest. There were a raft of allowances and discounts and a child tax allowance per child. You could set your mortgage interest against tax at highest rates and there was no pension fund upper cap. It was high allowances, high tax system.

Lawson sensibly eventually reduced upper tax rate and NI to 40% (now 52% until April) and we moved to two simple tax rates - lower and upper and got rid of some fairly complex tax allowances. That was tax simplicity. It worked well. Tax receipts went up and it made sense and I still favour it.

Roll on a bit and Labour introduced more complexity. They made 90% of parents benefits claimants - tax credits (which I never got as I earned too much but those under £60k got) and all kinds of complexity and a 10% tax band for a time.

We seem to be in a total muddle over what tax policy ought to be. If we want to mvoe people off tax credits and child benefit and housing benefit when they are in work then employers would need to increase wages and perhaps tax rates and employer NI could go down. We could abolish entirely tax relief on charity contributions, pensions, ISAs and the like and just have income all tax at 20% from all sourcse, whether capital receipts or income and no child benefit.