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?

What are the cheap parts of London hibble? I live in SE London zone 3 and it's at least 2k - month to rent a decent 2 bed. I literally have no idea where is cheaper as I'd move there.

You could buy a nice little 3 bed house in a town in Hertfordshire and be in St Pancras International within 40 minutes for around half a million.

Actually I tell a lie - it's about 1500 a month having consulted rightmove.

How much in commuting for two people though wayfarer?

We are looking at the moment Essex/Suffolk way and commuting would cost us 10k a year - so offsets the amount we'd save in mortgage.

completely derailing thread!

Op already said if they moved further out her DH would never be able to get back for bath time for the DC at all, due to his work schedule. Op did you talk to your DH yet about this move op and whether you're really gaining valuable work experience in the one year before you move?

Wow so even AFTER you've paid rent your combined income is 124K per year....and you're whinging about childcare costs and tax...seriously?!
Unbelievable...

The OP is not treating childcare as the joint household cost it is. If you split it between the two of them, obviously her job in itself has a higher take home pay than £200 pm. She's also still paying off her student loan and has included travel and a clothes budget. Lots of people don't earn that much after you take those things out. But the high childcare and student loan are temporary issues.

If bath time with the kids for DH is a high priority then that means compromising on other things.

Munchkin I have sent you a pm.

Girlelephant what was the programme? Do you have a link to it?

Uhhhh, no Zoflora, not even close to 124K - We pay a lot of tax. I'm not complaining about the >40% tax that we pay on our incomes, I'm complaining about the effective 91% tax on the bonus.

fakenews DH not back from work yet but he is on his way home. His boss is away this week on business so no real discussions would be able to happen before next week. I will have a quick chat when he gets home but he will probably just want a glass of wine and some time to relax before bed. We're doing something for valentines on Friday instead when we have a sitter (MIL)

ah of course, yes it's not going to be ideal timing for a planning style conversation in the week. This is the other cost of long hours jobs, very little time to think through non-work things in detail.

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.

Is that right? That can't be on.

I think some kind of childcare benefit that isn't means tested would be good. But then I also don't understand why there's nothing for kids under 3, surely something should kick in after 39 weeks to encourage or facilitate women back into the workplace once mat leave finishes?

I also didn't realise how fucked over you were once your earnings hit £100k. I agree that you should pay more tax as you earn more, but not to the point where one of you is better off staying at home.

Sorry OP, I don't have much advice for you, I think you've been given some solid advice here regarding looking into pensions, etc. I know your husband's company doesn't currently offer childcare vouchers, but I would strongly suggest that he suggests it to his HR/Payroll/Benefits team, they are really easy to put in place and the employer saves on NI contributions too, so it might just be overlooked at the moment.
I think you need to have a good conversation about your finances, how you can make the most of what you have and what would happen if you did emigrate. If your DH is likely to continue these kinds of hours when away I really suggest you go somewhere with a strong community, including people your age and with kids similar ages to yours. Being away from home can be lonely, not working can be lonely, not seeing much of your partner can be lonely - just make sure you get yourself a community of friends.

But it's not a 91% tax is it OP? SL is not a tax....And without a SL your DH wouldn't be earning 100k in his 20s presumably.

At least you got some of your bonus. When I first left uni I was earning under the threshold for SL (so less than 15k and not that long ago). The month I got a bonus (not much about £500) SL took a fair chunk of it because it's a simplistic system and looks at earnings per month not per year so it looked like I was now earning around 22k a year or whatever..However my salary for the year was under 15k so technically I shouldn't have paid anything back. Did I moan about it? No, I just figured it was a hundred quid or whatever I wouldn't have to pay back when I was earning more money.

Your DH earns so much money that his SL should be cleared in what 5 years? Count yourselves lucky.

By paying his student loan off quickly the OPs DH will actually pay a lot less back than lower paid people, who pay a lot more interest and can pay for 30 years until the rest is written off. But they have paid more overall because the interest has been accumulating faster than they paid it off.

It is interesting that Student Loans are already affecting economic behaviour though - op is thinking of not going back to work partly because of the impact of sl. So not called a tax, but definitely an influence on economic activity.

And op is presumably not even on the £9k fees a year sl (or she probably would be very young indeed!). I think that for those who graduated on that scheme there is a much heftier 'tax' on earning more than the threshold. And for those (many) who will never pay the whole lot off but get it written off after 30 yrs you can't really say 'that's not tax, you're just paying it off faster' because the alternative is to have it written off.
This economic effect was not unpredicted at the time.....

Barbara of Seville is right - the lower paid (above the threshold) pay the most interest. Hence there is a (weak?) incentive not to work above the threshold unless you earn a great deal. Will be interesting to see how strong the effect of that incentive turns out to be with the £9k loans.

People who are saying that posters are being mean to the OP or are "jealous", maybe consider that there are some ways to annoy people and show complete and utter lack of tact.

The OP in her early posts accounted for buying clothes in her bills when working out she "only" has £200 a month to live on a month. There's quite a bit of selective/creative reporting. She spends a lot of time going poor me, but their shared income is much higher and they go on decent holidays too.
Great. I also work hard, have nice holidays, nice house and money left over at the end of the month. But I also understand how fortunate I am.

There are many people out there who can't afford new clothes every month, would love to have £200 a month left and would love to go on holidays.

I think there's be very different responses if the OP stopped with the "but we work hard so poor us" take on things. Lots of people work bloody hard in life and don't make that much. There's a bit of luck in life and the right opportunity coming up at the right time. Simply repeating this rich person pity party its so unfair, its not even worth me working, lets leave the country just ends up reading quite snobby and bratish.

CIut - yes, there may be a case that parents should help daughters not sons with student fees horrible though it sounds as it is so very very common (unfortunately) for women not men to work part time or give up work when babies come so may never have to pay the student loans back although hopefully in our feminist family the girls will keep working (and indeed one has).

These kinds of threads however will never go well as no one who doesn't earn much likes to hear how things might be hard for someone quite well off.

A lot of mumsnetters have no idea how much tax some of us have to pay. For example you lose your single person tax allowance entirely. A MN the other day did not believe me but of course it's true. That pushes your top rate of tax/NI up even higher so although the highest rate of tax/NI is currently 47% (so about half of your earnings are confiscated by big wasteful state) it is higher than that when loss of allowance is factored in and no child benefit of course is paid.

My own preference however is not child care allowances and all these reliefs and complications - just a simple low flat tax at perhps the basic rate tax/NI leve of about 33.3% (or 20% would be even better), same rate for corporation tax, same rate for capital gains tax so we don't have people pushing money around from income to capital from individual to company and many many many fewer tax reliefs - none on charitable contributions, pension contributions - just simple clear easy to understand and fairly low taxes for all.

tiger rather than think it's unfortunate that women and not men return to part time work after having a baby, we should change the system to SUPPORT them rather than penalise.

I don't think that it is a case of people not understanding that wealthy people pay a lot of tax, we all understand that the tax burden is higher as you earn more. Until you get to the levels of wealth that allow you to indulge in tax avoidance schemes that ensure you pay hardly any.

It is the fact that high earners often choose to have high outgoings as well and then moan about not having much money left over. I have no grudge against high earners, good for them, but like everyone they have a choice as to what to do with the money they earn. If they choose to live closer to work with a shorter commute and it is very expensive, well, that is a choice they have made. It is a perfectly ok choice to make, but it comes at a financial cost. Just as if you choose to buy an 80k car that costs a fortune to run, you can't complain that someone running a 20k car doesn't understand how hard it is. It's fine to have an expensive car that costs a fortune to run, but it is still a choice, not a necessity.

There are quite regular threads on mumsnet with people who are in about the top 5% of UK earners compaining that no one understands how hard it is for them and that no one can manage in London on less than six figures etc. I don't know the statistics, but there are millions of people in London and there aren't millions of people on six figure salaries, so clearly it is actually possibly to live on less. It's obviously a lot easier to live on more, but that isn't the same as it being impossible to live on less.

And the thing about 'making the right choices in life' is that they are only the right choices if they actually work out. People don't make decisions in life thinking they are the wrong choices.

You must be bright enought to get a 48k job but you keep talking about a 91% tax on that bonus when in that 'tax deduction' you are taking into account SL and (as I understand it) the loss of the childcare allowance/tax free regime. Completely skewed and inaccurate.

As others have suggested: boost his pension pot and maybe have a chat with your employer about implementing childcare vouchers, they may well benefit from it too before the scheme is no longer open to new entrants!

For those suggesting high salary equals talent/hardwork etc this is very ignorant and forgetting the way the market works. Certain jobs are very high skilled and not that high paid and the reverse.

Fair enough on considering being a sahm just make sure your calculations are correct. I'd personally count 10pounds per day approx with my kids to ensure I have enough to feed and entertain them. So it's 200(approx) spent on being sahm. But everyone does it differently.

I do think small bonuses should be tax free, say £5k and under or something. And capped at one a year so people can't get round it. The whole point of them is that they are a reward for extra hard work - but by the time you've paid tax on it, which can be up to 60%, it can become not worth the effort when you consider what you've given up in terms of personal time to get it. Obv massive bonuses (my ex used to get a £100k bonus regularly, it was basically part of his salary but paid in a lump sum i think) are a very different thing.

These kinds of threads however will never go well as no one who doesn't earn much likes to hear how things might be hard for someone quite well off.

Oh come on. The types of struggling between those on 6 figure salaries and those on minimum wage aren't comparable.

The OP chosen to live in a very expensive area so close to London and it is a choice. They could live further out where it would be a lot cheaper and commute. They chose not to.

OP go and watch I, Daniel Blake and educate yourself about the poverty people live in. Then come back and moan about the tax you pay

Why on earth should the government pay to reduce your childcare costs when you get such a huge salary?
The cheaper childcare cost is a way for the government to help enable people with children to be able to work when they have children. I really don't think that you fall into that category.