Submitted by Caroline Sommen-Stokes on Friday 14th April 2023
Published on Thursday 27th April 2023
Current status: Closed
Closed: Friday 27th October 2023
Signatures: 49
Relevant Departments
Reform £100k income threshold for tax-free childcare and free childcare hours
We want the Government to reform the taxable income threshold for childcare entitlements (tax-free childcare and free childcare hours).
The threshold should apply to households, not individuals, should be adjusted for inflation, and entitlements should be tapered, rather than lost completely.
We believe the threshold should be reformed due to its distortive nature, as highlighted by the Institute for Fiscal Studies:
“childcare entitlements [...] remain limited to families where no parent earns £100,000 or more. Above that level, the entire value of that support is removed - creating a “cliff-edge” effect [...].
"The distortions that this can create are among the most severe you will ever see within a tax and benefit system. A parent with two children under 3 whose childcare provider charges England’s average hourly rate for 40 hours per week [...] earning £130,000 would be worse off than one earning £99,000."
Source: https://ifs.org.uk/news/childcare-reforms-create-new-branch-welfare-state-also-huge-risks-market
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