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?

Hahaha no sympathy for my landlord. His family (company) has owned this property since the 1950s! There's no chance he has a mortgage on it. Our rent will have business rate tax paid on it after expenses of replacing washing machine etc

oblada the reason I raised it is because DH and I lived in London in the 90s and rented because it was the economically sane thing to do.

Op, you can start a property ladder on something small, a 2 bed in Zone 2 flat where its easy to commute. Greenwich 2 bed flats can start at 500k for example. Then in 2-3 years time you can let it out and move to a more permanent home. The children are young and with such a close gap, a nanny is better in term of cost saving and keep you sane. She could cover mild sickness too while with nursery your child is home the moment he is sick.

Thank you for starting the thread which we are all finding very interesting.

"At the rate we are able to save now this will never happen. I really don't understand who is buying these houses. " (£1m houses). Mine is worth more than that. So how do we do it? It's not easy. We live in zone 5 - massive commute even when I was up with babies breastfeeding all night - the only way we could get a house, not some box in London. My parents both worked full time and worked for 10 years after marriage and put off babies all that time - again to be able to afford a house.

I have paid the older 3 children some money (my pension and savings) in the last few months which has gone off their mortgages and for my son enabled him to buy his first property - opne reason that has happened as unlike a lot of mumsnetters' mothers I have always worked full time and I deliberately picked high paid work (law) and always worked full time without long maternity leaves - not something most people are prepared to do. Sometimes both people in the couple earn over £100k (my daughter) so there is a bit more money but even so 50% goes in tax - it's not cheap.

Your best bet would be to go abroad for a few years, and save the difference in tax towards increasing your deposit so you can buy rather than rent. Working those hours and paying so much in rent so no security got the future would annoy me more than the tax thing.

The marginal rate between £100k and £120k is huge but 1. I grew up in a single parent family that relied on benefits off and on due to irregular work, and the problems if being in a high tax band are much more easily dealt with that the problems of the breadline 2. If your husband gets a good performance related bonuses at that level it shows he is well thought of and pergorming well so likely to get promoted through that band soon enough. 3. The difference between you being a SAHM and working is only £200pm- so decide what's better...more child time by staying at home longer or the future security that comes from you returning now (promotions, career track, pension contributions). My point is that you have meaningful choices- people in real poverty don't. 4. That extra £200 a month, put into his pension, will turn into over £400 a month and also reduce his taxable income so you get the childcare vouchers...

Sorry if you don't mind me asking, how much was your house when you bought it? (Or perhaps, more to the point, what multiplier of wages?) -- please ignore the question if you don't want to answer.

It seems like people buying the houses around here must be buying them after having their previous houses increase in value (in proportion to wages) and therefore have very large deposits. House prices seem to have shot up considerably since the town and country planning legislation in the 90s.

I'm not a lawyer but I am very good with numbers and this seems to be one of the main things restricting supply. Cheap credit and population increases being the main things increasing demand. If brexit results in lower immigration and more financial uncertainty, both of these demand factors will be impacted and perhaps house prices will come down after all. Although I am not aware of any link the legislation that restricts planning has to the EU.

Cross posted Orchid, yes I am starting to think is our best bet too. Seeing the DC is worth a lot to me, it was a real toss up whether to go back to work or not.

However much 200£ might be worth to some people for me personally it's not worth not seeing my children. And the decision to go back to work was always taking into account the longer term impact of a career gap. And also, once they are in childcare, we would be able to get a mortgage based off of 2 earners and 2 dependents, not 1 earner and 3 dependents.

Out of childcare*

As an aside you do know about the new lifetime ISA's, money saving expert overview?

You can each pay in upto £4k/ year gov top up each years contributions 25% at end of year. Anyone 18-39 in April 17 can apply and keep paying in until you're 50. Money can be withdrawn as a deposit on a house.

I have worked for the NHS for 15 years, now part time as I can't afford childcare full time. Even being part time I can afford less than a whole day a week with a childminder so relying on family for two days when really, DGM is far too old at 81 to mind my DS until my DM is home from work. There is no other way, or I wouldn't be able to work at all.

I am sure you will cope.

Lifetime ISA won't help us. The cap for house cost is too low.

i didn't know about the LISA! Thanks this is very interesting.

I believe it's 450k cap and the government help to buy (new homes) has a cap of 600k in London.

but what about retirement planning? It can also be used for a lump sum at 60.

A biscuit for each of you. I couldn't see you starve.

child, I think it's important people do ask other people how they affords to buy actually and I don't mind people asking. I am as old as some of your mothers so am not the best candidate for this.

Our first house was very very similar to this one in zone 5 - outer London.
Zoopla suggests £422k current value www.zoopla.co.uk/property-history/63-hillside-crescent/south-harrow/harrow/ha2-0qu/37748251 3 bed terraced.

Let us say we have 2 people in a couple without children - out situation when we bought and let us say they need £450k including stamp duty. They borrow 90% and need a 10% deposit (actually the harder thing to get by the way rather than the mortgage itself for many couples). So they need £45k deposit so that is £22.5k each.

we will make our mythical couple both trainee lawyers in London on say £40k a year each and they save like billyo living at home with a parent or sharing a room at say £800 a month, for 3 or 4 years. They can save £22,500 each. They are now qualified and after a year or two both earn £80k.. They can borrow £405,000 on those salaries. They pay 2.2% interest on a repayment mortgage (and we paid 12% in my day and needed two full time professional wages). We could do it then and they can do it now.

In our day the house cost 2.6x our joint wages but the resulting mortgage at 12% interest a much higher proportion. Our couple on £80k each (£160k again borrow 2.6x their joint salaries).

IN our day most people could not afford to buy by the way. When I'd given birth the midwife quizzed me about whether I really owned the house as she could not understand someone in their 20s owning it.

How about something like:

Go abroad til youngest is at least 5, maybe more 7. Be at SAHM during those years but also do a masters and/or work experience/internships to boost your CV. Return to UK with a whacking great deposit, your DH through to the next level salary wise, you in a good position to resume career and you've had a chance to spend time with your kids whilst they are little. Hopefully in meantime, London property prices have corrected a bit.

As an aside, there is a massive difference between being a high earner and being wealthy, but we only seem to be interested in taxing personal warnings in this country.

Yeah but we need the money for a deposit! We already both have pensions

The other actually shocking thing about LISA is that if you need to take the money out for anything else, say, a house worth 460k you have to pay a fine to get your money out of the government bonus+interest+admin fee. I mean fair enough on the government bonus, but an admin fee?? It's a terrible way to lock up money. I also read that recently people have had trouble using it for a deposit because you have to buy the house first or some odd rules (check this though).

*earnings

The lovely zone 3 bit of London I lived in with much cheaper rent than yours for a larger property was in catchment for an outstanding state primary, with wraparound care - both my DC went/were accepted (we moved just before DC2 started Reception) & school PTA etc full of mid-higher earners amongst folks like us and significantly poorer - the usual London state primary mix I'd say. So you can move and find this plenty of places.

As your DH can't do pick up/drop off/breakfast/bedtime/bathtime, you will need to be somewhere your commute is easy enough, but a nanny would give you more options - they'll come for the morning rush (so you can make a sandwich ) & the pickup rush is not so stressful as trying to get to nursery before closing, & the DC have had dinner so you can just get the quality time you need. And you'll have another adult helping you, which honestly I'd say you really need.

If you move abroad, your chances of state primary will be difficult moving back, as KS1 rules mean very little movement usually in admittance - & you'll need an address before you can apply for a place. So if moving abroad, I'd seriously consider provision for private schooling when you return.

I honestly can't believe you can't save anything much towards a deposit on £148K, so I'd definitely be moving somewhere cheaper and rethinking nursery fees x 2. I know when they're tiny you worry about their friends etc, but honestly they adapt so easily at this age, it's later you have to worry about, so get all your ducks in a row now.

And have a serious conversation with your DH about how he sees the future & family set up & work for both of you in the medium to long-term.

I think you might be confusing the LISA and the right to buy ISA. The former is launched next month.

www.google.co.uk/amp/www.bbc.co.uk/news/amp/37318001

"The property cannot cost more than £450,000. This is more generous than the Help to Buy Isa, which is limited to £250,000 outside London, but £450,000 in the capital."

"You can only withdraw money penalty-free if you are buying your first home, you are over 60, or if you have a terminal illness.

All other withdrawals will incur an apparently hefty 25% exit charge, except in the first year (2017/18)."

OP I have sympathy for your position, but am confused as to why you have no sympathy for your LL losing money? Why do you have sympathy for yourself (in a relatively privileged situation) and not for her (similarly relatively privileged)? Is it the case that there is an envy culture where everyone despises those who have more than they do? Think about the posts you had early on this thread where people had no sympathy for you because you were on a good wage. Then consider whether there is a parallel with you not having sympathy for your LL (presumably because she owns a house and you don't).

The change that the Government could make (which was done by a socialist government in France rather than a right wing one) is to make the wages of household staff tax deductible - so the pay of a nanny and/or a housekeeper would come out of your pre-tax earnings rather than post-tax (which might in your case keep your DH out of the post £100k tax trap). That would help even things up between those with and without extra costs from children. Such a measure also helps keep full employment as it encourages mothers to stay in the workplace whilst also providing jobs for those in childcare/ cleaning etc which is the way money is spread through an economy.

Never bought in London but the 2 bed flat we rented in the 90s was worth about £200k and would now be worth £1 million. I don't think wages have increased 5 fold in that time and so yes I agree property looks expensive to buy. In contrast our rent was about £1,000 pm as against the £2,000 pm you are paying. Rents are more closely correlated with wages and therefore I think correction or long term stagnation is inevitable for some areas of London.

I live in Scotland now and prices have not recovered to 2008 levels. At 4 times average earnings they are also much more in line with long term averages (the media quote 16 times average earnings for London). The difference is that there has not been population growth, there are higher levels of house building, there is more social housing and there are not so many foreign buyers, although there are increasing numbers semi-retiring from the City.

LL is making good money from these properties. He's owned them, he's made a smart investment decision (or at least his parents did) and he has tenants who always pay rent on time and don't cause any trouble.

LL is able to structure his finances so that he is paying very little tax. Why should I have sympathy? He's probably done the best possible thing he could have done with his money over the last 60 years to be honest. Other than having a time travelers cheat sheet for the stock market, I guess he could have bought Enron shares, Apple, Bitcoins then Netflix ;)