To be pissed off at the new tax free childcare

[childcarechallenge]

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?

hate your post is smug in a different way - you're lucky/have made good choices :) to have a high earning DH that doesn't work long hours, you have 1 DC not 2 DC in a small flat, and you take home more than the Op does after costs. I agree becoming a carer can happen to anyone and it's pitiful what carers get and how they are hounded for it.

The London part is highly relevant to this thread, which is about what the OP should choose to do financially.

There are many benefits to living in London, but also many costs.

Paying 2 grand a month for a flat horrifies me. That is more than the housing costs of my entire extended family (my house, my parents, my sisters and my sons)

What is this new tax free childcare scheme? and how do you find out about these things?

I am on childcare vouchers....max GBP243 tax free towards childcare...it saves me about GBP50 per month, every little helps!

Museum, I am suggesting a new thread because the salary question is interesting, not as some kind of dig at you rather than Venus!

you're lucky/have made good choices smile to have a high earning DH that doesn't work long hours, you have 1 DC not 2 DC in a small flat, and you take home more than the Op does after costs

OK but the point is that if he DID work crazy hours we would likely move elsewhere so he could afford to work less - each to their own but a 70 hour working week is not for us. Likewise with the one DC - if and when we have another, we may make the same choice - move elsewhere.

How are the ops costs going to be more than mine apart from paying for more children to be in childcare? I also pay travel. I also buy clothes for work. Maybe her mortgage is higher but again that's choice isn't it. We could have got an extra room and/or garden and be paying an extra grand a month mortgage wise. We chose not to because we didn't want a stressful life.

Museum, I am suggesting a new thread because the salary question is interesting, not as some kind of dig at you rather than Venus!

Right, I misread that one.

Museum, even as I was typing the start a new thread comment I was worrying it could seem like a jibe, so sorry.

Blimey. This thread is very interesting. I like to see the facts and figures. 29K on childcare!!
I have never earnt your salary. And I'm not jealous. Mine is tres average.

Mind you the poster who was on 80k with 4 kids and would be now on 100k+, but she left because it didn't balance, I STILL would have carried on working!!

But that's what I mean, how does one spend nearly 30 grand on childcare???

Not to worry.

From personal experience London makes a huge difference. We moved from the South to London and DHs salary increased from 25 (plus 2k bonus) to 44 (+8).

I'm not complaining that he takes home 58K of his 100K salary, paying more tax than many people will earn over years, I get that. But to only be £1800 better off after a 20K bonus seems ridiculous to me.

Especially when it was touch and go for me whether to return to work given the amount that childcare costs, relative to my salary. I understand that many people are confused why I am only taking childcare costs out of my salary and not splitting it. It's because I'm looking at the opportunity cost - we are not going to equally give up time at work to look after the DC so this makes sense as a calculation method.

it's quite easy if you have 2 close together, even in the non-London city I live in, 2 lots of nursery is going to set you back £24k per annum. Yes you can hire a nanny but that has it's own risks associated with employing a person. I agree though, if I'd really wanted to be better off I'd have spaced my kids out more, given that didn't happen I'd have taken a few years out to make my life less crazy.

But that's what I mean, how does one spend nearly 30 grand on childcare

Umm, because that's what it costs?

2 babies in nursery. A Nanny could cost more, depending on hours, some Nanny salaries look quite high and you have the employer's NI (and pension?) costs on top, plus possibly things like extra car insurance and food for the nanny.

But that's what I mean, how does one spend nearly 30 grand on childcare???

For 2 kids in London that doesn't sound outrageous. Nurseries have huge overhead.

Whilst I can appreciate it is hard to swallow those numbers - for comparison I work in a job that requires a degree, is about 60-70 hours a week, about 40 mins away from London. If I worked Full time I would earn £34k, my childcare for 2 would be £30k. That £34k does not take into account any tax I pay, NI, pension, union fees etc or general living costs.

I don't work FT but that is a choice not based on finances but lifestyle. It does actually cost me to work, I have to do other related jobs alongside my job to top up my salary. I need to work though as I want to keep my hand in whilst my little ones are at nursery - selfish maybe but a choice we have made.

My husband also works in a job where he needs a degree, has a 1st in a science based one which is required, and takes home less than £50k - including his bonus.

Agree consider increasing pensions contributions if it is borderline. Also you may need to consider the free 30 hours funding which is hopefully being introduced in September is also restricted if one of you earns over £100k.

This might have been mentioned but not read the whole thread.
I haven't read the

No-one has to live and work in London That's mostly true, but there are some jobs that in the UK can only really be done in London and where the start time is so early that it wouldn't really be possible to live far enough out of London that your living expenses went down.

I imagine London childcare costs are quite high. Another reason to move further out or to another area to save money.

There is a wider point here about how we view public services. While I don't think anybody is arguing that higher earners shouldn't pay higher tax rates (although ideally getting progressively higher as income increases, not fluctuating as they do between £100k and £150k which is inherently unfair), decent services should be universal. This is important because it helps social cohesion.

Treating high earners as cash cows but excluding them from services undermines the stability of those services. I'm sure most people wouldn't advocate excluding higher earners from using the NHS or state schools and decent childcare should, in my view, be provided for everyone in a similar way, as it is in some other countries. To ask higher earners to pay an ever higher proportion of income tax, as has been the case over the last decade, while selectively removing their access to the shared services/ support that they are funding will make it easier for governments to undermine those services; they will come to be seen as purely redistributional measures rather than shared services that we fund collectively (albeit with higher earners paying more of the costs and many, who are net recipients of the tax system, effectively getting them for free).

Thanks Noodle, I am aware of the 30 hours childcare and yes, we wont be eligible. I guess I hadn't added that in and that would add up to more than 1800....

But my point was Lorelai that you don't necessarily have to have the exact same job, you could do something similar, depending on transferable skills etc.

Plenty of the people who work in big jobs in London could do something else somewhere else if they wanted to.

Yes Lorelai, but everyone has to balance these things and decide what priorities they have with the money available. Many people simply don't have these choices.

I agree with Oneiroi. Nicely put.

Nurseries have huge overhead

Ok but again that's down to choice. Childminders are a LOT cheaper. And nurseries in cheaper areas are cheaper. Mine is £51 a day and our childminder was £55 a day.

Just for a reality check I reran the numbers for a typical 2 earner family where I live who are buying a 2 bed semi with a garden (£8k mortgage costs). One PT worker on £12k and FT worker on £30k with flexible working patterns to cover childcare or FT worker on £45k with SAHP would be better off than the London couple on £148k. No-one in the 3 scenarios benefits from tax free childcare so it does lead me to wonder whether they are a sensible state benefit.

Yes, it's unfair.

Mind you I didn't get any help either when I had our children - first three I didn't even get that 6 weeks on 90% pay and next 2 I was self employed so not a penny and back to work within a few days. It's never been easty.In our case as I earned a lot more than their father the "opportunity cost" as you put it was his in that sense and in the first year when we earned the same childcare was 50% of each or our net wages so one of us worked for nothing. I got pay rises and he got a bit of a rise so he kept working when he might have stopped which paid off ultimately.

Tax law until now has been on the basis childcare is not a necessary expense for working. Now we have this brand new tax relief but the state has chosen not to give it to the higher paid even though the highest paid now pay more tax and a bigger proportino of tax than at any time in history.

My argument which never does down well here is that women on over £100k should be the ones getting these kinds of benefits and child benefit as their children tend to be the ones who contribute most when grown up and earn the most and pay the most tax whereas children of those who have very low incomes tend later themselves not to do too well but that change will not be coming any time soon.