So this is a little bit late because Budget Day was yesterday: sue me, I’ve been at work.
In amongst all the usual bend-over-because-here-it-comes stuff in the Budget statement was something which is clearly throwing a bone to all the middle and upper class people who’re losing out as a result to the recent changes in Child benefit eligibility:
In short, a two parent family, both working (or a single parent in work) who are earning enough not to need Universal Credit up to a ceiling of £150,000 per parent (yes, you read that correctly) will be able to claim back up to £1200 per child per year towards the cost of childcare. Let’s just leave aside the inconvenient details that a) this will be less than a tenth of the total cost for anyone with a baby in full-time nursery, and b) apparently earning more than £50,000 a year means the taxpayer shouldn’t be paying you £1055 a year in Child benefit because you earn too much to need it, but earning £149,000 a year means we should be paying you £1200 childcare because HARDWORKING FAMILIES for a minute because there is a more pressing point.
Parents who are low-paid or in part-time hours (or both) and who qualify for tax credits help currently or Universal Credit once that is rolled out will be offered help under a different scheme:
The scheme for families on universal credit, being introduced this year to bring together key benefits and tax credits under a single payment, will extend the refund of childcare costs available to households from 70% currently to 85% for families in which both adults pay income tax, up to a maximum of £300 a week of childcare bills for two children.
That sounds good, right? It is good. It’ll be a massive help for those who earn enough to qualify for it. But there’s the catch. You have to be earning enough to pay income tax. And they’ve just raised the personal tax threshold, and they’re going to raise it again soon. So if you’re a single parent and you don’t earn more than £10,000 a year, or if you’re a couple, one working full-time and the other working say 20 or 30 hours a week and thus not quite making the tax threshold, you don’t qualify. You’ll still be eligible for the up to 70% of childcare costs that is offered under the current tax credit system. But let’s just look at what that 30% that you do have to pay for actually means in cold hard cash terms.