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?

And now he is bigger and his disabilities much more Severe there is no childcare that can meet his needs

I do agree with bagpack above that you have to see your career as an investment (whether you are male or female) and if the unfair system penalises people at certain income and benefit levels (as it does very unfairly at times) it remains for many women and men better to carry on working full time because ultimately most children will be at full time school and in many careers particularly for these higher earners your wages do eventually go up even higher away from the narrow band of unfairness.

I am moving into the next phase soon when the youngest two go to university in September if they get the grades they need. I will still be paying (£150k over 3 years) but in terms of ease of life - being able to go to that meeting at 9am hundreds of miles away or the after meeting drinks home by mid night it will be much simpler calculation than before as no one will be waiting here for me in the way it is when you have small children around (although I have to remind myself university students are at home about 50% of the year so it's not quite a clean break).

I am very anti Brexit but the one thing it might achieve is some kind of change, perhaps also on the tax and benefits front so may be, fingers crossed, it might even help the wide range of women on this thread. We shall have to wait to see.

Tax system is unfair at some points, yes.

Living in London is expensive, yes. (But is definitely doable on much much less salary than your combined - we lived in lovely zone 3 London in 3 bed house with garden, 2 children 2 years apart for all the pre-school years with both of us working on not much more than your £48K. No benefits except CB. 30 min commute to Central London. Just checked Rightmove & you could rent there for £1450-1600 now. So you really can't be so badly off you're not able to put some money by with a salary like yours.)

Calculating whether to work when kids are young is tricky. But I think the marginal cost-benefit calculation is never really a good idea regardless, if it's possible to suck up a bit of short term pain. Your situation perhaps a bit more nuanced with possible move abroad & being young, and the total lack of help you have from your DH day to day. I'd be wary of the future, personally- what's the 5/10 year plan? When will he step back a bit to make things more balanced? Very easy for roles to get set you'll struggle with later.)

Live out nanny or nanny share I bet would be better than nursery. Nanny would do wraparound when school age too.

six in contrast our community city nurses were v good in helping sort DLA (son is just under 2) so perhaps its getting better. I got chance to take redundancy when we were in for yet another short stay which will cover us until Ds is a bit older and then hopefully we can get him in nursery and me in the kind of job that will cause some on mn to sneer down their nose at my apparent lack of education and motivation

Some good practical advice there from NoSquirrels.

I agree NoS.
Also my husband mvoed hundreds of miles to fuirther my career. Plenty of men will do that but far far too many won't so women get left more and more behind on the career stakes. We got engaged on the basis I already had a job lined up in London and if he wanted me he would have to move with me (and he did, Always sound out men in advance to see if they are non sexist and feminist and would move for the woman's career - it's a good test.

Great post, NoSquirrels.

This thread has reminded me of a thread in Chat a few years ago. The OP had calculated that she could afford another child based on her moderate income and certain benefits to which she was entitled. The government then announced the various changes to the system, and she posted, pregnant with DC3, and terrified that she wouldn't be able to make ends meet. She got an absolute roasting from MNers who queued up to lecture her that the state had no responsibility for her individual choices, and that she needed to suck it up.

Obviously childcare's circumstances are rather different but tbh (and forgive me if I'm inferring too much here) I get the impression that financial planning hasn't really been a priority or a factor up until now. DC1 was unplanned, so DC2 comes along shortly after because we're on good salaries so let's get the baby years done with, I'm sure it'll be fine even if we haven't done the sums. Lots of posters have made some excellent suggestions around pension salary sacrifice schemes and I think any decent IFA would be able to help you to make these years in the lower part of the next tax bracket a bit less painful.

If I'm right, however, your priority now needs to be planning and preparing for the next five years. If you stay in the UK, what are the schooling options nearby? It's only two years away for DC1 and if you want a decent pre-prep then you need to put names down now. If nursery fees are a stretch then private school will be too. What are the local state schools like? What will you do for wraparound care? Most school breakfast clubs don't start until 8am. A PP pointed out that it would be more cost-effective to move to a bigger property, even if it does cost an extra £1k a month, and hire an au pair for more flexible wraparound care.

Alternatively, if the move abroad really is inevitable then you need to start preparing for the eventuality now - visa applications, international schools etc. If you couldn't work, could you study and gain a higher qualification relevant to your field?

Part of the reason we live where we do is because of school catchments. They can be quite a nightmare around here, some schools have sibling only years and some have 5-600m catchment areas. Where we are we are pretty much garunteed a place at an ofsted "outstanding" state school that does breakfast club at 7:30 and after school till 6, although without actually doing the home-school-nursery-work-nursery-school-home trip I don't know how long it would take until I do it for real. According to route planners it is doable but I would probably need to do a bit of catching up on work on a few weekday evenings for days when I drop tools.

We can't afford to move somewhere with more bedrooms for an au pair and stay in the catchment of a good school (and pay for au pair on top). I'm really starting to think our best bet is just to move abroad. We could save up a hefty deposit for a house and here that's just not really happening. A cheap family home is more than a million and even if we found something for 1m we would need a deposit of 100k plus stamp duty will be 45k or so. Then repayments over 25 years would be 4700 a month.

At the rate we are able to save now this will never happen. I really don't understand who is buying these houses. In a couple of years DH will be in the top 1% of earners but we won't be able to afford them. I'm sure something has to give in the property market. It is surely unsustainable under current conditions. Our families are not rich, and unlike many of my friends cannot afford to give a deposit as "early inheritance".

My commute is so tight as it is that there are few places we can live and still have access to nursery and school and be close to my tube line (and DH other line- although less important). The whole thing is a bit of a logistical mess, maybe a live out nanny would be best. I didn't really want to move dc1 as they absolutely adore nursery and have completely thrived there (so much so that they've continued to go for shorter hours as I'm still getting childcare vouchers in my mat leave). They have really good friendships with the other children and good bonds with the staff. But I suppose a move abroad would be far more of an upheaval, but still a very good experience for very different reasons.

Why didn't you save up the childcare vouchers whilst you were on Mat leave to lessen the financial burden when you returned to work? I assume they can be saved up for a while?
Surely you can buy somewhere in commuting distance of London for less than a million pounds?
If you need to save s deposit them
Perhaps moving abroad to save up might be your best bet but don't forget that property prices might rise whilst you are out of the country and you still might not be able to buy in your preferred area.
Moving abroad will also mean that you lose the catchment area you are currently in and when you return it will be even harder to get your children into schools because you will not be applying for the reception intake and will be allocated wherever there is a space.

All the reasons you give for not moving from your current area still apply for moving abroad but you seem to not be looking at it that way.

If you go abroad you will lose your catchment area when you return.
If you go abroad you will probably be giving up your job and you said you didn't want a career break in your cv.
If you move abroad you might still be unable to buy a property when you return as you have no control over market prices.

Your best best for buying a property might be to look at cheaper areas and go and rent there now so you already in the catchment and will get school Places and be able to save money for a house deposit due to the lower rents.

OP I haven't RTFT but I would seriously consider moving abroad for a couple of years. We are not quite in the same position (DH is on £90k, I am a SAHM) and we are almost completely unable to buy a house. We have had no family 'inheritances' coming early and despite saving for the last 6 years we always seem to be stamp duty and fees away from the amount we need. If we had the opportunity to be £40k a year better off I'd definitely do it. At one point I worked out that tax wise, as a single earner, no benefits family we are being taxed at a rate of 80%. Which I can get on with until I can't even pay to access services offered to others for free. I could go on all day. The tax system penalises higher earners forgetting that they are putting the most in.

And as for sandwichgate, get a grip people. Yes OP could make her lunch the night before but she will be stretched for time in the morning and she can afford to buy lunch so why shouldn't she.

That's not the point. Try RTFT before you jump in.

And as for sandwichgate, get a grip people. Yes OP could make her lunch the night before but she will be stretched for time in the morning and she can afford to buy lunch so why shouldn't she.

Yes she can buy lunch if she wants however don't then moan about the amount of money you have.

HTH.

OP I haven't RTFT

Then Prehaps you should.

She's not moaning about the amount she has, she's moaning about the tax rate?!

Which country are you going to? We are also relocating not mainly for tax purposes but it has played a huge part in deciding to leave the UK. We have family and friends in very similar situations (all earning over £100k) and making plans to move elsewhere to enjoy more of their money. Engineers, IT experts - all very highly skilled people. The bonus thing affected my DH last year and this was one of the major factors. There are better opportunities overseas. Good luck OP

Piglet there are 28 pages on this thread, I made it through the first three of essentially mud slinging, does it improve at all?

She's not moaning about the amount she has, she's moaning about the tax rate?!

Maybe RFTF as you admit you haven't

Monte Hong Kong

No choice is perfect, its just about making a toss up. Probably abroad, then move back to Bucks or similar instead of back into London is looking like the best option.

Shukinskaya yeah it has some really interesting bits about cosmopolitanism v. communitarianism and the speculation on the structural reasons why different jobs are paid different amounts.

It also has various bits where the OP makes shallow and/or inaccurate comments about higher / lower rate tax payers, which explain why a degree of hostility had built up.

Anyway OP, reading your posts, I think your basic problem is that you and your DH have generally privileged earning money in your life choices, but now you are finding that in the current economy you're still not feeling wealthy in comparison to the inherited and foreign wealth that has flowed into London. Interestingly, this is something that Thomas Piketty commented on not long ago:

www.theguardian.com/books/2014/apr/28/thomas-piketty-capital-surprise-bestseller

But as far as your own life goes, if your DH has a pay rise scheduled for March/April, presumably your financial deprivation is only going to last a few weeks .

So you've cluelessly jumped in at the end, oblivious to the many other pages of discussion?

childcare on the nanny front - i'd do your sums carefully, if you're nearly under water on the cost front from experience I'd advise against it - ours did get sick, she had a lot of weeks off, it made about 6 months of my life a gruelling mess where I was losing money working and not seeing my kids. Yes we were unlucky but if you can't easily afford to pay statutory sick pay and a replacement nursery/temp nanny I'd think carefully. Plus the cost of the nanny's holidays, all the mess being in your house, money for the nanny to do activities with the children. The plan of going abroad saving, then moving further out seems a good one. Given your DH's working hours, I'm thinking that making bath night 1 night a week isn't enough of a reason for you trying to stay closer in, although it's sad for even this small piece of time to be curtailed.

Moving just for tax reason is pretty sad imo.

My parents were and are pretty well off. My dad earning in the region of what your DH is earning and with my mother earning more than you. They live in France where the tax system is much 'worse' than the UK for the wealthy few. What they did though is they had a good accountant and made some wise investments throughout their lives. Not tax evading as they are happy to pay their way but clever use of money. Maybe speak to a good accountant. And as I mentioned before look at asking both your employers for childcare vouchers before it is too late.

Fwiw my mother never stopped working not because it was particularly great financially (given they had to pay a full time live out nanny for me and my brother even after we started state funded nursery ie 3yrs old and my dad was working crazy hours) but because she was investing in her future. She did stop eventually when she was about 50 (earlier than planned but all worked out great for them and she has never been bored since).

i think this op is positioned wrongly - it seems clear that the DH pretty much has to move abroad for career reasons, the tax benefits and potential savings are the hook to get DW on board, when her career is going to take a hit here which needs to be mitigated in some way by a masters etc exactly as you said op.

Spare a thought for your Landlord Op. On checking where I used to live, which sounds about where you are it is likely that the flat you rent is worth about £1 million. It is also quite likely that it fell in value last year and will continue to do so this year. You are only paying £24k in rent which is a gross return of 2.4%. If they had their money in the stock market they would have made 20% + or £200k and could have kept it in a tax efficient wrapper (ISA / pension). This is my backhanded way of saying if you think the property market is unhinged, which I agree it is, then the last thing you should be doing is scrabbling to get into it. You are much better off renting. You also have the opportunity to maximise your DH's pension contribution with any investment having almost zero impact on your current spending power. You would be crazy not to.

Howabout - interesting point and actually one thing my parents didn't do until later in life was to buy a house. They rented for many years and my father has always said that property ownership isn't the investment people think it is and there are loads of better ways to place your money for a good return! But again it is in the context of rentals in France which is much more protective of tenants...