Martin Lewis has backed a Conservative proposal to end the controversial childcare support rule that can leave parents losing thousands of pounds in help after earning just 1p over a £100,000 threshold. The Money Saving Expert founder said the Conservatives were right to challenge the system, which he described as a “cliff edge”, arguing that gradual reductions in support would be fairer than removing it all at once.
Lewis: 'Cliff edges are cr*p'
In a post on X, Mr Lewis wrote: “The Conservatives have pledged to end the childcare support cliff-edge, where if a parent earns 1p over £100,000 they lose it. They're right, cliff edges are cr*p (tapers are better) though I'll leave the limit for the politicians to debate.”
Under the current rules, parents in England can access certain childcare benefits, including 30 hours of funded childcare for eligible working families with children aged nine months to four years, provided neither parent has an adjusted net income above £100,000 a year. This means a parent whose income rises just above the threshold can lose access to support that may be worth thousands of pounds annually.
Call to fix Carer's Allowance limit
Mr Lewis argued that replacing the cliff edge with a taper would allow support to reduce gradually as earnings increase, rather than disappearing suddenly. However, the financial expert also called on politicians to address another benefits threshold that he said creates an unfair disincentive to work in the Carer's Allowance earnings limit.
He wrote: “Hence why the Carer's allowance cliff-edge needs to go to. I hope they'll support that as well, as its also a perverse incentive that disincentives work and is bad for the individual and the economy.”
Carer's Allowance is available to eligible people who provide substantial care for someone with a disability or health condition. Under the rules Mr Lewis highlighted, an unpaid carer providing at least 35 hours of care a week could lose the entire allowance if their earnings exceed the permitted weekly limit.
He explained: “There if an unpaid Carer caring 35hrs+ a week, earns 1p over £204/wk net limit, they lose all the £86 allowance. A terrible system.” The precise earnings limit and allowance rate can change, so carers should check the latest official figures before making decisions about working hours or income.
Criticism of 'single highest earner' measure
He also criticised the way some benefits and childcare support are assessed using the income of the highest earner in a household, rather than considering the family's combined circumstances. He said the approach affected Child Benefit as well as tax-free and funded childcare, arguing that it could disadvantage single parents, single-earner households and families where one partner earns substantially more than the other.
He said: “The effective 'single highest earner' measure is used in child benefit as well as tax-free and funded childcare. Its unfair for single parent, single earner and dominant earner families, who may get less or nowt when neighbours with far higher combined earnings get it all.”
Lastly, he called for a change to the name of Tax-Free Childcare, arguing that the existing label does not accurately describe how the scheme works. “Tax-free childcare is misnamed it's a top up not tax free,” he wrote. “It should be called the working family childcare top-up then it does what it says on the tin!”
Tax-Free Childcare allows eligible families to receive a government top-up towards qualifying childcare costs. For every £8 paid into an account, the Government adds £2, up to a maximum contribution of £500 every three months for each child, or £1,000 for a disabled child.
