to think it's bonkers but also not to turn down this pay rise

[fortunatefamiliar]

Name changed as I will likely get flamed.

DH and I have a very good household income, I am not denying that. DH is in a sector which pays well and thankfully has not seen a covid-related downturn. (I'm public sector but in a good job).

He was due a payrise in April but they deferred them due to covid, very understandable. As it happens their sector has been largely unhit and so payrises are now being discussed. DH has been offered a very large payrise as during COVID he did a really big piece of work which has saved the company hundreds of thousands over the next few years (company has a multimillion pound turn over) - he came up with the idea, in his own time did a demo to show it could work and then supported his team to get it up and running. He definitely deserves the payrise.

BUT

if he takes it it, it means we will no longer be eligible for DSs 30 free hours and DD won't get hers next year when she becomes eligible. After tax, the payrise will not cover the nursery expenses of the 2 children and we will therefore be worse off.

This seems like absolute madness! But it will cost us around £30k in 3 years, and the payrise will be just shy of that over than time period (after tax).

I've suggested to DH that he counter offers for a LOWER rise, which will put him just below the threshold for the free hours. This is still a good rise.

The alternative is to ask for a rise that will cover the loss of the 30 free hours, but this is quite a bit more, taking in to consideration tax.

It seems like a totally bonkers situation to be in (5 years ago we were scraping money together to pay the bills!) but can anyone else an issue with rejecting a payrise?

Cross posts, you need to earn 100000 net to not get the free hours, so it will all be fine.

otherwise the childcare would essentially eat my salary and make it not worth me working

You’re wrong. It’s worth it because it’s supposed to be your (collective ‘your’) responsibility to pay for childcare for your children. If you stay in work ‘technically’ working for nothing, you’re still getting pension pay ins and possibility of future pay rises and bonuses. If you don’t because you’d rather be at home - then that’s your choice.

And this goes double for a family like yours where actually you can afford it you just don’t want to take it. Most families factor in a hit to the income when they have children. We did, then we had twins so double whammy. Pretty sure we didn’t get 30 hours free back then either - this on a joint salary of about £40k.

We had the same problem OP. We both work NHS and without help for childcare my wages barely covered childcare bills. We do share all our money but it comes down to if childcare is more than your wage what is the point in working? We were just over the threshold for the 30hrs too I ended up leaving my job as childcare was just too much money and hard to organise. I now work agency and can choose my hours, work a lot less hours, can work around the 15hours childcare but take home similar amounts. The nhs has lost a nurse because childcare is just too much on a nurses wage. If we had been able to continue to use the 30hrs I probably would have stayed in my job.

LonnyVonnyWilsonFrickett becasue of the cost of wrap around and holiday care and the loss of the second sibling discount at nursery, our childcare bill goes UP when DC1 goes to school, not down.

@Hardbackwriter is correct. Your DH’s increase is £20k. You currently pay £14k which will double, so the extra will also be £14k. You can’t put the whole £28k against the increase as you already pay £14k!
You’ll still be better off. And that’s without the fact that 15 of the hours will remain free according to PPs.

Or, look for childcare that doesn’t charge you over £1000 for the ten hours or so you’re not currently claiming. Bonkers.

As a PP said, it's 100k net so unless he's getting a £50k rise you'll be fine.

@Stanleyville

Cross posts, you need to earn 100000 net to not get the free hours, so it will all be fine.

It’s 100k gross x

www.gov.uk/30-hours-free-childcare

If you or your partner have an expected ‘adjusted net income’ over £100,000 in the current tax year you will not be eligible. This includes any bonuses you expect to get.

Your adjusted net income is your total taxable income before any personal allowances and minus things like Gift Aid.

Adjusted net, not just net.

You can’t be seriously expecting advice.
You by your own admission have a good income and yet you still want free childcare. ! ODFOD.

That link states it’s 100k of taxable income... i.e gross

If you or your partner have an expected ‘adjusted net income’ over £100,000 in the current tax year you will not be eligible. This includes any bonuses you expect to get.

Your adjusted net income is your total taxable income before any personal allowances and minus things like Gift Aid.

If your joint income is just over £100k then you would still qualify - this suggests that it’s only where one of you earns over £100k that it’s an issue.

You would still get 15 hours. So the cost wouldn’t double, it would increase by 15 hours per term time week but even if it did double from £14k to £28k then you’d still be £6k a year better off before tax.

What about tax free childcare?
www.gov.uk/tax-free-childcare

You need to actually do the maths because at the moment you seem to be guessing

[quote Stanleyville]www.gov.uk/30-hours-free-childcare[/quote]
From that link:

"Your adjusted net income is your total taxable income before any personal allowances and minus things like Gift Aid."

I would definitely look at the pension side of things and work out the long term gain.

sorry I see I was not the only one to follow it
..

Also, would his income this year be over the threshold? This may not kick in until April if the pay rise is being applied for part of the year

Seems like you need to go and do some sums. I can't believe how expensive your nursery and wraparound are. Please say you live near London?!

slipperywhensparticus a nanny is around £40k per year (including employer NI contributions, tax, insurances etc). so definitely not cheaper.

Hercwasonaroll I think £1200 per month for 2 kids full time is quite reasonable actually. It is certainly on the cheaper end around here.

OK that makes sense, but it's not as if £1200 doubles if you lose the 30 hours.
30 hours is term time only, places add extra charges to recoup the fact the government funding is low. You need to do better maths.

I have the same consideration and agree it feels like a very fortunate 'problem' to have. My salary is over the threshold but normally not by much. This year I got two bonuses because of the company circumstances (this was unforeseen). My DD is 2 and therefore we'd normally be eligible for the tax-free childcare scheme. However, we've worked out we'll have to forgo it this year because the extra is too much to pay in to my pension. Next year, I'll predict my yearly salary and change my salary sacrifice amount so I am under the threshold. When she's three we will be paying in to my pension and ensuring we stay under the threshold to remain eligible whatever the 'cost' of this to our take-home pay.

bog standard! Give me a break, love.

I was paying 900 (before using vouchers etc) for one child 3 days a week so I can see how it gets v expensive. One i looked at was even more and charged more for under-2s.

Maybe my maths is wrong but I can only see it costing about 5/6k which will easily be covered by a 20k rise.

I am in London it is true, but my nursery would be £2500/month for my 2 kids full time. They are not FT