30 hours free childcare - earning over £100k

MJC1983

Hi All,

I am in fortunate position of earning approx. £112k per annum so have never claimed for 20% against childcare costs or 30 hours free childcare now my eldest has turned 3. However; I have been advised that if I make contributions to my SIPP to bring my annual net income below £100k, this would make me eligible for the 30 hours free and the 20% discount. I wondered if anybody else was in a similar position and how they go about claiming this?

We are a single income family and with both children in nursery full time , our monthly costs are over £2k so if this could be reduced in anyway that would help.

Thanks in advance for any assistance and I fully appreciate I am in a privileged position. 

Grumpy_chap

MJC1983 said:

Hi All,

I am in fortunate position of earning approx. £112k per annum so have never claimed for 20% against childcare costs or 30 hours free childcare now my eldest has turned 3. However; I have been advised that if I make contributions to my SIPP to bring my annual net income below £100k, this would make me eligible for the 30 hours free and the 20% discount. I wondered if anybody else was in a similar position and how they go about claiming this?

We are a single income family and with both children in nursery full time , our monthly costs are over £2k so if this could be reduced in anyway that would help.

Thanks in advance for any assistance and I fully appreciate I am in a privileged position. 

I am not in your position.
However, earning £112k means that the final £12k is taxed at an effective marginal rate of 60% because of the personal allowance taper.
If you can also qualify for the child care, that makes the return even better.

What you have not said is how much you / your employer already contribute to a pension.  There are annual limits (usually £40k) on contributions, but carry-forward can change this cap.  The rules also work slightly differently if a DB pension rather than DC.

This might be better in the "cutting tax" area of the forum.

artyboy

Grumpy_chap said:

MJC1983 said:

Hi All,

I am in fortunate position of earning approx. £112k per annum so have never claimed for 20% against childcare costs or 30 hours free childcare now my eldest has turned 3. However; I have been advised that if I make contributions to my SIPP to bring my annual net income below £100k, this would make me eligible for the 30 hours free and the 20% discount. I wondered if anybody else was in a similar position and how they go about claiming this?

We are a single income family and with both children in nursery full time , our monthly costs are over £2k so if this could be reduced in anyway that would help.

Thanks in advance for any assistance and I fully appreciate I am in a privileged position. 

I am not in your position.
However, earning £112k means that the final £12k is taxed at an effective marginal rate of 60% because of the personal allowance taper.
If you can also qualify for the child care, that makes the return even better.

What you have not said is how much you / your employer already contribute to a pension.  There are annual limits (usually £40k) on contributions, but carry-forward can change this cap.  The rules also work slightly differently if a DB pension rather than DC.

This might be better in the "cutting tax" area of the forum.

Even worse, it's actually 63.25% because of the extra uncapped NI. 

Anyone with taxable earnings between 100k-125k (or for that matter a bit more....) really should be doing everything possible to use pensions or other tax allowances to get their taxable income just below 100k. The added value of the free childcare is a bonus, but it's not the main benefit here!

Grumpy_chap

artyboy said:

Even worse, it's actually 63.25% because of the extra uncapped NI. 

Ah - yes, thank you.  I had only considered income tax and failed to consider NI on top.
Let's hope the OP is not in Scotland.

MJC1983

Hi Thanks for the responses.

My employer contributes £110 per month and my employee gross contributions are £183.45 i.e the bare minimum. I have already been contributing to my SIPP to increase my personal allowance and avoid the 60% tax on earnings over £100k but had thought that I was restricted from any childcare benefits due to earning over £100k whereas I am hearing that I can benefit as my 'net income' is just under the £100k mark,