Childcare tax breaks for working parents.

[youarewinning]

Please someone explain this to me? There seems to be a £2000 tax break for families where there are 2 working parents.

So does this excude single working families as it excuses families with a SAHP.

Too little, too late and again the main focus is on Couples.
So again penalising single parents, aswell as partnerships where one works and the other is the stay at home parent.

It is wrong on many levels, especially as those on up to 300k jointly may still benefit from it yet singles and sahp will miss out again...
I could almost yawn at what this government comes up with next zzzzzz

Well Cameron and his cronies definitely will not be voted in again by people like me. He will lose voters and even those that will benefit from this, will see that it is yet another empty promise brought out to win his rich little voters

I don't think SAH parents are being marginalised.

It's not possible to get a tax break if you don't pay tax - and effectively this is a tax break albeit not at everyone's marginal rate of tax.
And I interpret this scheme as assisting people to work by helping with the cost of childcare, and SAH parents don't need childcare in the same way that working parents do.

I know a few SAH parents (interestingly more and more men) and they would not expect to receive govt assistance towards childcare because they don't use childcare - they gave up work in order to be able to care for their children themselves.

Why do SAH need childcare? As someone has said it is a tax break. So if you pay tax you benefit? It is a bit like complaining you don't get a pension when you're still of working age. You're ineligible!

It is penalising single parents though as they still need childcare, obviously.

But single parents do get it, don't they?

But single parents can use the scheme if they work.

Does this compensate me from going from £243 a month tax free to the lower level of £124 for child care vouchers when they changed it a few years ago?

Also, surely I will only go back to the same level of government 'benefits' than I was at when they removed child benefit from my family??

I still don't see how this will make my family better off.

Thanks. Sounds like it may need some calculation to work out if better with ccv or with the new scheme, depending on individual circumstances at the time. I suspect the more children you have and the higher the childcare cost, then the more the new scheme would be better, where as with one child, the voucher scheme may be better.

Of course it is penalising a sahp who uses childcare.
The tax break and childcare are 2 totally different things.
Just because the gov are using a tax break for childcare subsidy, doesn't mean that sahp won't miss out on subsidised childcare. of course they need it too.

It's complicated to figure out but I think the problem with it is that you need to be paying around £8,000 per child in childcare to benefit, as the government will only pay 20% of whatever you are paying in childcare. So it will benefit parents who need full time childcare.

In my situation my husband works full time and I work part time. He claims the vouchers and gets 40% tax relief on the £3k childcare costs we need to enable me to work, so we are better off in this instance.

Under the new scheme we would only be eligible for 20% of that amount.

I hope all the creches don't instantly put up all their fees. The govt need to make sure that doesn't happen. They introduced something like this in Ireland years ago (before the collapse, well before it, and now axed again) but literally over night, childcare expenses all went up across the board, childminders, creches, afterschool. all rates went up.

We both work & it's better than the current voucher scheme for us - so am a bit happier.

Not sure what all this "discrimination" talk against SAHM is about - if you have a parent at home then you don't actually need childcare do you? plus the free nursery places kick in at 3+.
Single working parents will be eligible or can stick with the vouchers.

It's not tax-free. Currently childcare vouchers are taken out of pre-tax income, so before student loan, NI and income tax.

This new scheme is just a flat 20%.

Personally, we'll be sticking with the childcare vouchers, as we'd be worse of on the new scheme, as I suspect many people would be.

I don't see how it's penalising SAHP, because it doesn't affect their current childcare choices which are either:
a) pay for it yourself via savings/grandparents/partners' wages
b) pay for it using working partners' employee childcare voucher
c) wait until the free hours aged 3

All of those options are still open to SAHP, nothing's being taken away from them is it?

I honestly cannot believe that politicians think we will fall for this.

I can read my payslip and see that I won't be better off. Don't they think people are idiots?

Government can't control what childcare providers charge, so increase in fees is possible. Though with other changes going on, such as childminder agencies, maybe there will be some control on fees, though would that breach fair pricing rules (is it called a monopoly when one organisation sets fees for many?)

Some of us will be better off though - it would be interesting to see what the majority is.

I think the SAHP argument is completely daft - if you are a SAHP why do you need free childcare??

(Although I do agree that this government massively undervalues the role SAHPs play, I don't think this particular argument re. childcare holds water)

We would be worse off under the new scheme. DH is a higher rate taxpayer, and has been in his scheme since before April 2011, so we get higher rate tax relief on his contributions. In addition, if it was taken out of salary sacrifice we would lose more of the Child Benefit as DH's net salary would go up, and he is in the £50-60k bracket.

At least they have upped the age limit, it was originally due to start for children aged under 5 in 2015 and increase each year, which would have straight away excluded 2 of my children anyway.

I need to do some more sums though...

Twelve

Working parents have your points a and c too, but are receiving help.
Some sahps working partners don't receive employee childcare vouchers.
The only difference is the working aspect.
Both sets of children need childcare.
I know some wouldn't choose the childcare, I wouldn't particularly.
However, to play with her friends at our local after school club during the holidays even just one day, I have to pay for this because I choose to look after her the rest of the time.
When others choose to work, have more money, can afford this and get help.

WoodBurner - good point on the effect of salary sacrifice and child benefit withdrawal. I'm sure your family won't be the only one who has to take the CB withdrawal into account because giving up the salary sacrifice will bring you into the withdrawal bracket.

Yes, good point about the Child Benefit thresholds.

Morethan - obviously option d) for SAHPs is not paying for childcare. That's not an option for most working parents, unless they have very amenable GPs.

childcare vouchers are infinitely better for me - XH pays the max amount in each month as part (most) of his child maintenance, so, unless he moves jobs and isn't entitled to them any more I'll stick with that.

My calculation is as follows. We currently have childcare costs of around £12k per year (this will go down shortly as DS starts school in September, thank goodness - been clinging on since I returned to work after DC3 last October). So we would save £2000 (the maximum) per year under the new scheme.

Currently, we both sacrifice the max £243 per month. This saves me £933 per year and DH £1225 per year (I think? bit unsure on this calc, as he is pre April 2011). So total savings currently are £2158 per year.

However, if we went to the new scheme, DH's net income would increase by £2916 pa, meaning we would lose 29.16% of our child benefit = £714.

So we would be worse off by £872 per year, nearly £75 per month. That's a lot of money...

Really good point about the salary sacrifice thing. Ending the current scheme will mean I pay off more student loan and make more pension contributions. Not necessarily a bad thing but not a priority to me right now.