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?

There is an interesting discussion to be had about means testing though and what impact that has and whether it's 'right'. eg why do (some) people agree with means testing the child care allowance, or child benefit, but not state education or healthcare? (Would op be berated for thinking she is entitled to state education or healthcare for her dcs? No.) The actual question has got a bit lost but that's the gist of it I think.

I think it's possible to lose sight of life's infinite possibilities as well! for example could op and dh leave London for elsewhere in the UK, and both work part/time shorter hours and possibly be better off if that meant they could buy instead of rent? Maybe...might have to do different work, but worth considering?

But you don't "get" a huge salary, you "earn" it. And that usually means working the sort of inflexible long hours than mean maximum childcare!

If everyone took out of the system a proportionate amount to what they put in, childcare help would look v different. Now of course that wouldn't be the right way to do it - but maybe think about it before you get so accusing, d2!

But you don't "get" a huge salary, you "earn" it. And that usually means working the sort of inflexible long hours than mean maximum childcare!

Again depends on what job. Not always true by any means.

Childcare is a household bill and should be treated as such

This.

While you are better off then many, I can understand why you are annoyed by very high marginal tax rates - they are unfair and very complex and expensive to administer. It's also a bit silly with childcare as it's effectively an expense, if you don't have it you can't work and pay tax, so it's silly for the government to clobber people. However, if you have a six figure income you are very fortunate and it is a bit u to threaten to move to a low tax country. Personally I think it's reasonable for the well paid to pay into the system in accordance with their earnings.

Why on earth should the government pay receive less of your salary to reduce your childcare costs when you get such a huge salary?

OP, I can't believe how blunt some of these responses are. I hear your message loudly and feel outraged for you.

It's not about how much you earn, it's more to do with being fair: you wrk incredibly hard, assume you work in a professional environment etc therefore have to endure loads of crap that goes with that (level of responsibility, dress code etc) and commute into London (awful!) and work extra long hours.....

I get why you're pissed off. Id be too. This socialist view of take from the rich doesn't work when the rich aren't really the rich - they're just the ones who are stuck between the really fortunate rich and those on average wages. All your sacrifices will hopefully pay off.

Enjoy your bonus and pray for a change in tax breaks....

Kids need childcare. You either pay someone else to do it & lose some of your salary or you do it yourself & lose all of your salary. Suck it up.

If you earn 48k per year, it's not actually true that you are only left with 200 pounds per month. You get to make pension contributions that SAHP would not make. And by staying in the job market full time you will have career progression. So you may have to pay childcare for a few years, but within a short time you will again be taking home a large fraction of your salary.

I have been in a similar position but I can't feel sympathetic to a family on a gross income of 150k per year.

BTW the UK is actually a relatively low tax country. Yes, you can go to countries outside Europe with low taxation (and correspondingly low public services, stark divide between haves and have-nots). But in Europe tax rates of 50-60% on incomes of 50k+ are really not unusual.

This is why removing child benefit from me and all my children's cousins was a bad move. It is not that we necessarily need the money (although even on my high income I've never had enough spare cash actually to save the child benefit or anything ilke that and indeed I still claim it now and pay it back on my tax return each year) but because it makes us disillusioned with the whole system and it is people like I am and the original poster here who pay more in than we take out who are absolutely vital if the less well off are to be funded. If you lose our support of the welfare state system because we get less and less out of it then the system will break down. Universal child benefit (and indeed free nurseries if we had them) for all would make us support the system and the massive taxes we pay.

a lot of people are missing the point that the DH is very likely to have to move abroad for his job in 1 year or less, by the sounds of it. Exactly how much career progression and excellent experience is Op going to get with an 11 month old and 3 year old working full time? The amount of child related sick days will probably mean she is lucky if she doesn't get mummy tracked in the first 6 months.

fake that's a good point, but maybe dh can take half the child sick days, and do half the pick ups and drop offs?

yes I'd like the op's view on how likely that is to happen & whether it does happen - if he wasn't in til 11pm last night, and that's standard, it seems unlikely although I agree it's a choice he would have to make.

I agree with EnormousTiger that taking away universal benefits erodes support for the system. However I also think having increased the personal allowance at the expense of tailored benefits has created a situation where low earners are now seen as non-contributors. Gordon Brown's £100k shelf has been greatly exacerbated by the exponential increase in the PA over the last 6 years and those not raising children have benefited disproportionately.

In terms of childcare I don't think universal free care is the answer because high earning women benefit at the expense of the low earning childcare workers and those who choose to do their own childcare. I also have my doubts about the ethics of single parents being bribed to work for benefits through childcare subsidy.

I started a thread a while back suggesting childcare loans could be added onto student loans and paid back in the same way. This would give high earners the opportunity to spread the cost over their working lives and lower earners would be subsidised to the extent that they do not earn enough to pay back.

Having lived and worked in the US I agree that the UK is not in fact a high tax environment.

I think the Op should consider very carefully the long term impact on her career of a move overseas. In some industries international experience would be a benefit and a career break would not even be much of a problem. In other industries it would be a careerender.

Childcare is a household bill and should be treated as such

Yes, but the practicality is that if the OP didn't work, the childcare bill would be zero, so it's another marginal cost, along with the other costs of the OP working that the household wouldn't have to pay if she was a SAHP, such as commuting and possibly things like a cleaner and extra costs of food and other household services if there is less time to shop around and cook from scratch, so they rely on expensive ready meals etc. A SAHP may have time to make the money available go further.

But as this has to be balanced against the benefits of staying in the workplace in a well paid role. Would she be able to go back to a professional role after several years out of the workplace, or would she be limited to lower paid work?

If the family ends up going abroad fairly soon, it could be argued that there is little or no benefit in the OP working now, because many trailing spouses are either prohibited from working in other countries or if the culture is for SAHPs rather than both parents working, it is just too difficult or impossible for both parents to work, so in the short/medium term she wouldn't be able to stay in the workplace anyway.

of course the other thing is that a parent raising their children also has a value to the parent and the children. Mine have always been in FT childcare, that's my choice but if I were king for day there would be fewer penalties and re-training subsidies for people that have decided to take the hit and parent themselves, all caring is too poorly valued in our culture. Op's young, she's presumably only having these 2 DC she's had close together, that pre-school window is a very small window in a long working life.

I can't feel sorry for you as my husband and I slightly our guts out for under £48k a year (gross) between us. And we still pay for nursery, our mortgage etc. We simply couldn't afford another child even if we wanted one.

I think that's a good point fake - it is a choice for some couples whether to go down the 'main earner, secondary earner' route; or to have the model where both dparents contribute equally to childcare.

You perhaps are less likely to have one dparent get to a 'mega salary' position if you both share the pick ups, sick days etc, but fact remains it's a choice.

Not convinced that it's that safe a choice to be the 'secondary earner' - seen too many mn threads when things go wrong - I think the 'joint responsibility' model may be safer for both sides.

And as pp rightly point out, many do not have that choice at all, but have to work all hours for NMW. I think that is why this thread has gone the way it has - which in a way is a shame because it raises a good point about marginal incentives to work. Incidentally I read somewhere that the tapering of child benefit can mean that if you have 4dc the marginal tax rate between £50k and £60k is more than 100%. So the 100-120 marginal rate, while making no sense, is not the worst of the marginal rates.

Howabout, that is a really interesting point about the pa increase leading to people being identified as 'non-contributors'. Though people forget about VAT which everyone pays, fuel tax, and various other consumption taxes - so no one pays no tax if you see what I mean.

My DH earns just over 100k after bonus. I earn around £50k with on-call payments. We split the nursery drop offs and pick ups. We also split sick days 50:50 and if any longer sick leave periods are needed we either pay for extra childcare (more frequently we pay for one of our family members to fly over and look after DD for a few days, and pay them also). It's not a given that the lower earner takes the hit- I get paid less now but the plan is for me to become the main earner in a few years so DH recognises the importance of protecting my career.

Also agree that the UK isn't high tax by comparison to Ireland for example. But there are quirks of the system whereby you suddenly end up overall worse off at a certain income. Which feels unfair.

It also feels wrong that at our income level DH and I can't buy a family home (3 bed not a large detached home) with a commute of one hour or less to work for each of us. We don't want to miss family time, and we have no family in London so want to be less than an hour from nursery. London housing costs are absolutely crazy currently.

I agree about universal benefits like child benefit and childcare should be more supported by the State. I live in Finland now and childcare costs are means-tested but no one pays more than ~350 euros per month per child (with discounts on siblings) so there isn't the same disincentive to work but also at the same time there's a lot of support for parents to stay home with their young children with home childcare leave lasting until your youngest child is 3 years old so its the best of both worlds really - those that really want to stay home with their babies/toddlers can do so knowing that they can get their jobs back afterwards and getting a small stipend during the time (roughly 400 euros a month) while those that are keen to get back to work can do so knowing that childcare costs are not going to be an issue.

no it's not a given that the lower earner takes the hit but it's clear the DH here works very long hours that may well mean that this model has been adopted, hopefully op will confirm. If you work 70+ hours a week, it's not totally impossible to do a few pick ups and drop offs if you can work from home, but if it means you end up working til 1am and then struggle to fall asleep it can be unrealistic. We'll have to wait for Op to clarify this point.

Unfortunately there is not really scope for dh doing any of the nursery pick ups/drop offs - some days he works until the small hours and some days (maybe once a week) he is able to leave at 5:30 and do bathtime for the kids although usually its more like 8-9pm that he leaves work. He has to be in early in the mornings before nursery opens so its just not possible. He also very often ends up working on Saturday although never Sunday as its a rule we've decided on!

It seems crazy that in my old job my salary would have been less than childcare. I interviewed for this new job and got it but otherwise i wouldnt have gone back to work. With my (relatively smaller) bonus I was paying around 10K tax a year (not including student loan).

It seems silly for the government not to subsidise childcare costs when that would have driven me out of work. 2k per child is not much to ask for 10K in tax per year - plus the continued high salary after these childcare years instead of the likelihood of a lower paid job afterwards if i take time out. I dont really think that DH's salary is very relevant in this calculation. If you treat people as rational actors in an economy, why would anyone do this?

If I hadn't been able to find the higher paid job we wouldn't have been able to afford to have me paying more in childcare than i earn when I could just not work instead (and not paid tax/NI/student loan)...

as it is, you are in the second earner position and doing all of the childcare - presumably you'll be taking all the days off to look after poorly kids too? You know what I think op, I think you're flogging yourself and your DC into a hard life for the next year for very little practical return. At least the second earner usually has the choice to work a bit less. I'd like to move to Finland, that sounds lovely :)

Ask DH employer if you have the bonus in a few years time ie not now. Take it when you wont be paying for childcare.

Reduce his income to below 100K by taking a couple of weeks unpaid leave?

op, I dont know why you are complaining about costs, I would bet my bottom dollar you vote tory

Yeah, I've always said to DH if it doesn't work out I will just leave - it would be a shame because I have a really good opportunity to make a real difference in this new role and I am pretty good at what I do. The new job does advertise itself as being pretty flexible but I won't really know how flexible they are until I start.

DH has in the past taken the occasional day off with sick DC1 but only if I had an important client meeting out of the city that day, which is fairly rare. I have done most of these with DC1 just because he is so busy, and often leaves the house before they are awake. Long illnesses like chicken pox is when he has helped out before. I intend to vaccinate DC2 when old enough though as we really cant take that hit again, they are out of nursery for AGES.