Closed petition 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.
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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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