Childcare - 2 years old 15hrs free - BUDGET INFO

[jinkster]

Hi all,

After seeing the news and watching the budget live the latest is 2 year olds 15 hours free childcare from April 2024.

Is this means tested as I hover around the £100k in terms of salary?

The childcare choice website - I am unsure if it is up to date.

Has anyone else looked into this?

Thanks.

[steve_n]

Assume you need to be sub £100k taxable income to qualify, just like the 30hrs for 3yr olds now.

[jinkster]

steve_n said:

Assume you need to be sub £100k taxable income to qualify, just like the 30hrs for 3yr olds now.

Most likely as we normally do not qualify for anything but nothing is written down - I suspect the scheme is still too new.

[okgo]

If you hover around £100k then you’d need hugely compelling reasons not to use pension contributions to get under £100, and it’s near impossible to rationalise taking salary over £100k when you have young kids.

Obviously your version of hover may differ to mine but I doubt there’s many people taking the salary between £100-120k for example.

[jinkster]

Being tax efficient doesn't probably make any difference in terms of eligibility for the free hours.

I can keep my salary under £100k by adding pension contributions etc but the problem is there seems to be little small print at the moment who can have 15 hours and who cannot.

[okgo]

jinkster said:

Being tax efficient doesn't probably make any difference in terms of eligibility for the free hours.

I can keep my salary under £100k by adding pension contributions etc but the problem is there seems to be little small print at the moment who can have 15 hours and who cannot.

Well it does and always has done on the old schemes so I can’t see why this will be any different. It’s ages away anyway, I’m sure you’ll have ample time to react when they do release fine print. But if I had to bet, given you lose 30 hours and do not qualify for tax free childcare at £100k it would make sense that the threshold would be the same.

[Dave350]

You need to be under £100k taxable income to get the £2k tax free childcare, and the 30 free hours at 2, I'd read the same rules will be apply for the additional free hours available from 2.

When having children under school age, it's highly inefficient to earn more than £100k, unless you're at £140k+ and can't make the necessary pension contributions.

[okgo]

Which in 3 weeks will be £160k.

[chinnyman]

Why 160k?

[steve_n]

The annual allowance is going up to £60k. Therefore, you could earn £160k and put £60k in a pension to stay at £100k taxable earnings.