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?

I'm a big supporter of high taxes for high earners (and I fall into the higher rate band myself), but I do think the 'lumpiness' of the current structure is badly designed.

It's a lot worse if you're at the bottom end and coming off tax credits though as you still end up with ludicrous marginal tax rates and you're horribly poor as well . . .

It can be hard to see straight dc are small, but I think you just have to accept that as a family you'll have 5-8 years of lower income, BUT that it is an investment in your career and independence as a woman and that overall it's a tiny proportion of your working life.

Bloody hell, I can hear the staff at Reiss panicking.

Yes happyfeet we are both very young - student loan almost gone for him.

I agree with you OP. It is ridiculous and totally illogical that the marginal tax rate goes through the roof at £100k, back down again at £120k, then back up again at £150k but not as high as for those on 2/3 of that income! Why should the marginal tax rate between £100k and £120k be far higher than that paid by the very wealthiest who earn millions of pounds per year?

YANBU the marginal rate between 100k and 120k is scandalous. The tax system in this regard is unfair - it doesn't matter if other people earn less it is still unfair. I'd do what other posters have suggested can your DP add to their pension.

There are always these issues whenever you go into a different tax bracket or out of a "benefit" zone. Yes you will "only" be £1,800 better off this time but with each subsequent rise it goes into your pocket.

Do you know what most people do in these circumstances? They accept it, get on with their life and don't complain publicly when so may people are in a far worse position.

Never complain that you are paying higher rate tax etc because you know what - it means you are earning enough to have to do so!

I suppose like the rest of us you'll just have to live within your money.

of course the main scandal is that we can't tax multi-national corporations effectively so the balance of paying for services has moved to personal taxation...did anyone see this guardian article:

www.theguardian.com/money/blog/2016/dec/10/sixties-pay-people-earned-less-but-could-afford-more

There are lots of things which are unfair. Best make some placards and march on parliament.

Or get a lower paid job. Or move. Or accept that you are privileged to have that high an income.

I suppose like the rest of us you'll just have to live within your money.

This.

I earn your yearly wage in a decade. With 2 kids to support on my own and all the usual outgoings too. Not a bucket load of sympathy here

Where we would move, we would be paying 10% tax - It does make me wonder how many people in our situation would leave the country for 2-5 years to be able to save their salary for a deposit instead of paying it in tax.

I know we aren't poor and I'm not saying that we are, but being well off also makes us internationally footloose. Especially when you can get housing, international schools etc paid by employers. How many £s is the tax man losing because of sharp tax increases at this level. We can't be the first people to consider this.

Whilst paying 10% tax what else would you have to pay - school fees, healthcare etc?

Are you talking about going to work in the rich middle east?
I would rather live here, earn £120k and pay 91% tax on the top bit of those earnings.

Go then if you think you will be better off.

OP we are in a similar situation- but only 1 child. Haven't had a second yet due in part to the huge housing and childcare costs in London. We are earning pretty much exactly the same amounts as you and your DH, he was also tipped just above £100k by bonus- and we've taken advice re pensions etc.

With another 1-2 years experience I'll be in a position to apply for posts which pay £70-80k all over the UK and will probably move somewhere that you can buy a standard family house for less than a million pounds. DH will take a huge pay cut to do so but we will be better off overall (Small mortgage, possibly stay home dad/cheaper childcare).

We are lucky to earn good salaries and recognise that, but it does feel strange to think that we earn £150k as a family but still need to dip into our savings if an unexpected bill crops up. Rent (a tiny 2 bed house at the very end of zone 3), childcare and council tax is £4500 a month. We can't afford to buy in London despite a good deposit, and as you've said moving much further away when we both work FT would mean we never have family time.

How many £s is the tax man losing because of sharp tax increases at this level. We can't be the first people to consider this.

So you think you should pay less tax.

Your DH is a high earner, with that comes taxes. He earns approx 4 times the average wage.

As for moving abroad, yes you can, however, be warned those types of jobs that 'pay for everything' certainly aren't around in the numbers they used to be.

How many £s is the tax man losing because of sharp tax increases at this level. We can't be the first people to consider this.

Zero. Because if you go abroad somebody else will do your job here and pay the relevant taxes.

six Did you read my post? Employer covers school fees, housing.

We already have healthcare/dental/travel insurance in the UK, they would just convert our plan form UK to International. Also flights, relocation, language lessons.

Not the middle east, everyone seems to be leaving the middle east at the moment as oil revenues are down. Hong Kong/Singapore .

Rinceoir Sounds V similar, we are also in a 2 bed in Zone 3, although it's not small but it is a (garden) flat. DH works in an industry that doesn't really exist outside of London in the UK.

YY Six. Exactly.

People do make individual decisions choices though regarding tax rates to maximise their income at that point.
I don't find it worth me taking on extra work ( I work in healthcare) so I don't. They can be screaming for help but it's just not worth my while...It happens at every pinch point.

is this a realistic prospect to happen soon or is it still a few years down the line? It sounds like a good option to me especially if it meant you spent time with the children...we did move abroad for our careers and because we couldn't afford to buy in the SE at the time.

You have a high household income by anyone's standards so not surprised people aren't sympathetic. I don't think you should be entitled to a tax rebate on childcare in view of your income. However, I wouldn't blame you for moving to a country where tax rates are lower.

As Six points out, there are lots of other people in the UK who will do your and your husband's well paid jobs, OP. You can go to HK with a clear conscience. The tax will get paid.

In around a year. He currently works managing a team out there from the UK but with timezones it's not easy. His boss has asked him if he would consider going out there for a few years to work on some big projects that are in the pipeline.