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?

Would you be more or less pissed off if the joint income were £100k? £70k after childcare costs of £30k is still a very healthy joint income, and as others have pointed out childcare costs at this level are for a short period relative to a working life. Does it make you feel better to factor in your paid maternity leave?

OP, a thought occurs. Does your DH's firm offer a salary sacrifice scheme for pension contributions? Using salary sacrifice to take his pay back below £100K might be worth it...

Sorry not read whole thread. If it's France you're going to, you'd better look pretty hard at your tax status there first.

I have three teens, one of which has SN and is in a paid for specialist breakfast and after school care and an 8 year old in childcare, high rent and together we earn 26k. I'm not a UK citizen. Anything else you care to know?

Yes there is a narrow band just above 100K where the tax system becomes a bit ridiculous.

The rule I will implement when I'm dictator is that every worker gets to keep at least 50% of each extra pound their employer pays out. "Employer pays out" wording carefully chosen, as I include employer NI as part of the tax burden on employment.

This rule wouldn't just reduce marginal rates for those currently taxed at above 50%, it would also mean people on in-work benefits would have them withdrawn more slowly as they earned more. (The rate used to be about 67% I think, which I thought at the time was ridiculous, but after Universal Credit was introduced they monkeyed around with it and I think there is a band where the rate now approaches 100%.)

In fact my tax system looks something like this: people who earn up to the poverty line (60% of median earnings?) make no net contribution, the rest pay the same rate on everything else. (That rate will be forty-something percent. Employment income in the basic rate band is currently taxed at about 38%, if viewed properly with all NI included, so taking into account the bigger personal allowance, basic-rate taxpayers would not be worse off.)

I rarely swear but fuck me sideways are you for real?!

^^ This.

My ex took me for everything I had - when I left him I had £146 to my name. Not £146k - under £200! Because I was a SAHM to HIS kids for 8 years, I am now really struggling finding work, being out of the workplace for 8 years with two young children. For reasons I won't get into here I don't qualify for HB, and he won't even give me £10 to pay for school shoes for one of the DTs. So I have my JSA to live on. I often have to go without eating so my kids can have food to eat. But I get to actually spend time with my kids instead of having them in childcare full-time, and that's worth more than a huge salary or flash school/car or whatever.

So, while I think the tax may be unfair, I have little sympathy for your situation. You pay more in childcare than most people earn in 2 years, and they cope.

OP, I am on less than a quarter of your wage. Last year I got a bonus for doing some hard, stressful and (literally) dirty work that no one else wanted to do. It took me over a threshold for student loan repayments and made me substantially worse off per month as a result. You at least got £1800 rather than a negative value. If you're that fussed about tax, get a lower paid job where you don't pay so much- I pretty much guarantee most healthcare assistants work as hard as you or your husband.

Sorry, less than a quarter of your partner's wage. Less than half of yours. Same diff.

yes, did your children all go into FT childcare when they were 11 months old? :) I think I've said all I've had to say about what I think the Op's real dilemma is, I can understand why people get unsympathetic when actual sums are mentioned and as I said, I'm sorry that anyone is working these crazy hours.

Can you explainin how he keeps only £1800 of the £20k in more detail? Student loan is not a tax, if you pay it now that reduces the amount to be paid in future (and interest).

Get some tax advice, well worth the cost. Would I want to work full time for less than £50 per week? No, but not everyone wants to be a STAHM.

Only you know if it would massively damage career to take a break/work from home/freelance.

I would probably move but not necessarily to an other country. Could you leave London? If you take the move offered will you work too?

When the teens were younger I had my four year old, 2 year old and 6 week old in full time childcare.

Not France (they have pretty high taxes I thought?) somewhere in Asia.

Yes I think the pension idea is a good one, I assume they will let DH put in extra although at the moment its a regular amount each month.

With respect OP, you're fortunate to be able to cover childcare for 2 children out of your salary (using the same calculation as you)....Very few people can manage that. Part of the problem is having your children close together. I know these things can't be helped sometimes but there's good reason why a lot of people have a gap between children..We can afford one child in nursery. Two...No way.

I appreciate it's annoying to be taxed so much of DPs bonus but there has to be a cut off somewhere. 100k is nearly 4 times the average salary so if not there, where? 5 times? 6 times? How much money do people need before they shouldn't benefit from government support?

But next year your older child is going to be in FT school so your 29K expense will be much lower. Perkaps 20K.
In 3 years time again will go further down.
I think every parent on this forum had to make tough choices - mine was to go back to FT job with further commute than 30 min. And there was no flex arrangements for parents or WFH back then.
I was out of the hours 7:45AM -7 PM when kids were 1 and 3 and had a live-in nanny.

I think you should really not be pessimistic in the situation where you have choice and CAN afford that choice!

Just forget that the bonus existed.

You can't pay a mate £30 a day to look after your baby for example, she has to be OFSTED registered

Surely you can if you're both happy with the arrangement. it's only if one of you is claiming tax credits that the government might be interested in the arrangement?

Childcare is cheaper in other countries but often the ratios/conditions are not as good as the UK or people pay a lot more in tax to pay for it. You can't magic nurseries out of thin air, they have to be paid for somehow.

Anyway FakeNews this isn't competitive who had it worse, it's a reality check for the OP. There are people living day to day on coffee and hope. Be grateful you can move away from your high taxes.

understanding that op does have a choice and can make a different choice is the problem. common that it's not a particularly desirable state of affairs, I can understand why you're not personally feeling sympathetic.

They were dark days and I'm very grateful to be out of it.

place that make it so ridiculously expensive. You can't pay a mate £30 a day to look after your baby for example,

Of course you can, there is no rule stopping you from doing that as long as you don't expect govt help with the cost. yoit mate could be an aupair and then you could pay her even less than £30 a day if you wanted to and au pairs don't need to be ofsted registered.
The grandparents allowance will be coming in Soon too and that won't come with any stipulation of needing to pay minimum wage to grandparents.

So on 148K you wish ppl without children to support your childcare because in reality that is where the tax savings come from. They are not 'free' but someone has to fund them, usually those without a tax break.

I am going to stick my neck out here and say it is sickening. We are in a similar position but I dont work as financially we would be paying for me to go to work. When we conpated disposable income with my sister and BIL (CB, working tax credits and lower tax rate payers) and ourselves ( 100k salary inc bonus and car) my sister thought it hilarious that they are £1800 a year better off than us. Husbands dad (accountant) even checked it as we all couldn't believe it. Explains how we go camping every year and they go 4* all inclusive to Majorca!!!

Also if he's paying student loan on 100k he can't have been working that long as it wouldn't take more than a few years to clear it on that salary. So I may be wrongly assuming here but it sounds like not only are you earning a lot of money between you but you're earning it at a fairly young age which means you have years ahead of you earning these kind of salaries without student loans or childcare.....Then you'll be laughing. I'm sure you'll manage just fine.

I don't really want to move out of London as I see so little of DH as it is. The rare occasions when he is able to make it home for bath time or even to eat dinner with me would be totally lost if he had a long commute out to Bucks or wherever.

It doesn't change our taxes but our rent would be a lot less so thats something. I definitely couldn't work though as my commute is pretty tight as it is to drop off and pick up the DC.

I appreciate that government help needs to stop somewhere but it just seems like everything kicks in at the same level, and sudden drops, there's no gradual change for childcare. Losing the tax free allowance (10K) over 20K is very sharp.

I'm not saying that we are poor - far from it, but he did earn that bonus, it's not just luck of the draw, so to only receive 9% of it really stings.