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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To be pissed off at the new tax free childcare

974 replies

childcarechallenge · 14/02/2017 10:58

NC for this.

We have two DC in childcare and live in London. I'm starting a new job next month and my salary is 48K, after tax, student loan, childcare costs and tube to work plus a few other generally working expenses (clothes etc) I've worked out that I will take home less than £200 a month.

DH earns a good salary which is good because we almost completely rely on his salary for rent, bills etc. He just received a large bonus which pushes him over 100K which is the new limit for the new tax free childcare scheme from the government.

Essentially, between 100K and 120K after tax, student loan, the loss of his "tax free allowance" which is clawed back over 100K, and the fact that we will not be able to claim £4000 back on our childcare because he is no longer under 100K (This applies to BOTH of us because of his salary) means that of that £20K we are actually only £1800 better off. AIBU to think that this is complete robbery - DH works extremely hard, very long hours (sometimes 70 hour weeks) in a high stress environment and the government seem to take an obscene amount of his salary.

We have an opportunity coming up to move to a lower tax country in a year or so with his job and this just makes me really want to take it, AIBU?

OP posts:
Original poster
childcarechallenge · 14/02/2017 15:08

venus I'm not quite sure what your question is. DH applied to the internships, got them on the basis of an interview and his academic record. He did not "network" into them, is that what you are asking?

OP posts:
FlouncingInAWinterWonderland · 14/02/2017 15:09

You need to carefully read all the latest documentation. It'll be like many of these threshold things - there's usually a bit of wiggle room.

If you're paying the equivalent of 91% tax then why not stick the £20k (monies over £100k) in a pension, it'll get topped up by the tax, stop the personal allowance being eaten up and probably (but would need checking with an accountant) mean you're entitled to the tax free childcare. You could actully be better off (pounds in pocket) for putting money into a pension.

Just to balance your 91% pain. I'm a carer, from being a higher rate tax payer. If i earn over £115/ week I loose carers allowance. I also loose taxcredits at 41p in every pound I earn. If I work hard on top of my caring, when DS1 is stable enough for me too, I'm 120% worse off. I actually loose quite a bit more than I earn. Thats not from a basis of a decent starting salary either. Spreadsheets for the figures are my route to insanity.

The tax system has some anomolies.

Original poster
childcarechallenge · 14/02/2017 15:13

Ouch Flouncing I'm really fed up with the complicated tax system. It only seems to benefit tax accountants and the very very rich like footballers who are "companies" and only pay themselves in dividends.

OP posts:
Gingerbreadlass · 14/02/2017 15:14

Your DH could possibly ask for the bonus to be paid in shares or other benefits such as a car to bring down his total cash earnings on the number alone or up his pension contributions or gift aid.

venusinscorpio · 14/02/2017 15:16

No it's not what I'm asking. You referred to the practice of unpaid internships in many industries. Not everyone gets a paid internship so without funds that specific industry where possibly their only amazing talents lie is effectively closed off to them. You are trying to claim that your DH is where he is solely through hard work and talent. That is not true. People missed out on that internship, they weren't lucky, whereas your DH was. They may have been just as talented.

Original poster
childcarechallenge · 14/02/2017 15:18

Ginger DH is going to ask if he can make a one off pension payment, i'm not sure if its possible but it might be - Actually I hadn't considered gift-aid as he's never gone above the 100K limit before but this year he will which means he has to fill out a tax return, so that will be also taken into account. We always put charitable giving in his name for this purpose.

OP posts:
venusinscorpio · 14/02/2017 15:19

What if your DH worked in an industry where appearances are important and he didn't generally do very well in interviews? Yes he can work on it, but when you get rejected time after time that can take its toll on your mental health. He may be the most talented person but often that cuts no ice.

FlouncingInAWinterWonderland · 14/02/2017 15:21

self investment personal pension lots of companies around (this is just one I know) - it's not that arduous and you'd be in total control of the amount going in.

MuseumOfCurry · 14/02/2017 15:22

What if your DH worked in an industry where appearances are important and he didn't generally do very well in interviews?

This is getting a bit ridiculous.

Original poster
childcarechallenge · 14/02/2017 15:23

Thanks flouncing without going into too many details the financial products that DH and I can hold is somewhat limited by his employer due to regulatory reasons - so the first port of call will be to ask them.

OP posts:
GoosevonMoose · 14/02/2017 15:23

Loads of moderate high earners like yourselves are bailing like rats off a ship and it's not a good thing for the UK. You can throw as many biscuits as you want at them but no one stays if the grass is much greener for their family elsewhere. State schools are woefully under funded and recruitment of qualified teachers is a huge issue. More and more are jumping ship to the private sector. This is obviously a concern to many high earning families who then start to look at private fees. The NHS is on its knees which means for most high earners they pay for private insurance. Why wouldn't you go is really the question OP? Lots of international companies are taking advantage of the UK flailing about and offering attractive expat packages. It will be our children who take Brexit on the chin as state schools and NHS have their budget hit even further. Go while you can. It's not a pretty forecast!

venusinscorpio · 14/02/2017 15:24

It's not ridiculous. It makes a general point that not everyone who is the most talented is a high earner as some seem to think and vice versa.

Wordsmith · 14/02/2017 15:26

With an income that high there are many ways to mitigate tax quite legally, by putting more into a pension, for example.

I think if you start to view your joint income, rather than the fact that you only have £200 left yourself, you will see that you aren't that badly off.

And as for your DH working hard - I'm sure you will too if you are going to be earning £48K - not a small salary.

Whether you move to another country or not is your own business but surely other factor come higher up the list than the tax regime.

venusinscorpio · 14/02/2017 15:28

YY Wordsmith.

SomethingBorrowed · 14/02/2017 15:34

OP I understand you completely and YANBU.
A lot of posters just seem jealous. If it was easy we could all be in 100k+ jobs, not everyone has the motivation and abilities (and of course a bit of luck), but same goes for everything in life, doesn't it?

No need to go as far as HK, look at countries where tax is based on the household income (I know France does for ex).
We moved to the UK before having the DC but are thinking about moving back now that we have them because the amount of tax paid is ridiculous, especially when you are a family with one high earner and children.

venusinscorpio · 14/02/2017 15:39

Yes, everyone in a high paid job has a brilliant mind and everyone on a lower salary is just a bit shit.

Or maybe how individual jobs are valued differently is as arbitrary and unfair as this tax anomaly is?

MuseumOfCurry · 14/02/2017 15:43

Or maybe how individual jobs are valued differently is as arbitrary and unfair as this tax anomaly is?

It's not arbitrary. If the OP's husband's employer could get away with hiring someone cheaper for the job, they certainly would. It's supply and demand.

It's not nice that someone who cleans toilets for a living doesn't make more - they certainly should. That said, almost without exception (e.g. nepotism, corruption) high-rate taxpayers are bringing a relatively rare talent to the job.

TheEdgeofSeventeen · 14/02/2017 15:44

HOW are you only taking home £200 a month when you're on 48k a year??? Im going to be on 21-25K in London come summer ....shitting myself now. How expensive is your home???

almondpudding · 14/02/2017 15:46

If it is only 300,000 people I believe that people who get those jobs without nepotism are the exception.

venusinscorpio · 14/02/2017 15:46

And the government can get away with this tax arrangement. It's no more or less unfair.

venusinscorpio · 14/02/2017 15:47

Plus nepotism is rife.

BishopBrennansArse · 14/02/2017 15:50

Lol at the husband being not likely to become a carer.

Yes, that's how it works.

I've never been a homeowner or paid more than the basic level of tax.

Oh wait - yes I have.

It can happen to anyone:

venusinscorpio · 14/02/2017 15:50

You have no way of knowing of the relative levels of talent of someone on 100k compared to someone on 20k.

Basicbrown · 14/02/2017 15:50

It's not arbitrary. If the OP's husband's employer could get away with hiring someone cheaper for the job, they certainly would. It's supply and demand.

I really don't think it's as simple as supply and demand.

PigletWasPoohsFriend · 14/02/2017 15:50

A lot of posters just seem jealous.

No not jealous at all. My DH earns a good wage.

However when you throw around comments about 'what jobs earn half of my DH wage and work 70hrs' then be prepared to be challenged.