Avoiding the childcare trap

[Difficultquestionplz]

hi! I know there are a lot of high earners in this group so maybe other mums can help me. I am caught up in the 100k childcare trap.
back in the days when my salary was around the 100k mark, I was able to top up the pension, but that was before my child was born. Now my child has turned 3 and was hoping to finally get a little relief but it looks like it’s not the case…
currently my salary is higher, almost exclusively due to sales commissions and I am going to finish the fiscal at 260k. My husband is livid that he loses on benefits because of my salary and I am actually wondering if there is anything I could do in terms of investments that can be deducted that could bring me below the threshold.
I am not using any financial advisor because honestly when I looked into it they wanted to take 3% management fee just to manage the easy bits (pension, isas) and it obviously compounds.

thank you for helping
(please be kind, I don’t come from money, my job is paying well now but also highly at risk due to performance management or constant layoffs mixed with the joy of nepotism, unconscious bias/ blatant sexism of a male dominated environment)

The 45% tax rate kicks in at 277,000 EUROS in Germany. £125K in the UK.

That’s great advice and I absolutely agree, especially as women and mothers it’s so tough to find the right conversations and even the right professionals to support. Grateful for the advice!

Agree. But my post was in relation to people on benefits playing the system fraudulently. They dont think theyre doing anything wrong.

And you genuinely think someone contributing masses of tax and national insurance wanting to reduce those contributions - not stop just reduce - is the same as someone fraudulently claiming benefits and never putting in a penny?

Thank you, but the point is absolutely not lost on me. Let’s talk about this hypothetical person on £100k and receiving PIP. Hypothetically, they could be a single parent, with childcare costs. Mortgage, bills, just like the rest of us. Hypothetically, they live in the south east where mortgages are typically high. Hypothetically, they make it work. But hypothetically they also have to fund the cost of their mobility wheelchair & its maintenance. As well as pay for adaptions to be made to their car. Perhaps they have additional electric costs to charge their wheelchair battery. Maybe they also have a carer to help with some tasks around the house. But because they’re on £100k you’ve decided they’re ‘rich’ and don’t need their PIP.
It is very easy to assume £100k is a lot of money, but it’s like everything else, it depends on your outgoings. So no, I don’t think we should start stripping PIP back at £100k, along with the childcare, personal allowance, savings allowances (did I miss anything else?)

Being disabled is not a choice. The cost of living is higher for people with disabilities. Those two points are facts. But, this topic entirely distracts from the OP’s point.

My husband is livid that he loses on benefits because of my salary

This is a very strange and insensitive thing to say.

I used to be homeless and I was able to stay in a hostel.
I also needed to use a food bank because I had not one penny to my name.

I now have a job and a home and so I am not eligible to stay in a hostel or use a food bank.
But I’m not livid about it, because I don’t need to use these things.
I may not get things for free anymore but the situation I’m in now, far outweighs the situation I was in/other people’s situations.

You don’t have to earn as much as you do. You could easily go and get a job on NMW and then you’d be entitled to free childcare.

You’re choosing to staying in a high paying job (which I don’t blame you about) but you can’t have your cake and eat it too.

And your DH being livid that you’re too rich to claim benefits is one of the most insulting things I’ve ever read.

What jobs do you both do?
Are you not able to both reduce your hours and so you won’t even have to use childcare?

I’m sorry for the abuse you’re getting here OP! When I had small kids the 15 free hours were universal, whether that’s for SAHP or high earners.

Don’t worry about full-time childcare costs in the short term - these years go quickly and before you know it, you’re paying after-school club or nanny fees supplemented by holiday clubs. It gets better quickly.
On long-term planning, stick with the basics at this point: the most important thing for you is the pensions taper. The internet will have ways to get your qualifying income down to the level you can still invest and don’t forget to use all prior years if you haven’t. Assuming a solid relationship, don’t forget your DH’s pension too. The next most important thing is ISAs for you and DH. Apart from pensions and ISAs you might not have more to invest if in the SE.
Good luck and yes I agree Reddit is better than here for high earners.

If you were denied access to the food bank because of your spouse who also wouldn’t support you would you be ok with that?

If your husband is enough of a dick to be "livid" about this, sounds like you're more than well-off enough to leave him. Unlike a lot of people, who have infinitely fewer choices than you.

How about counting your blessings, instead of the tiny amount of money you're "losing out on".

Honestly, I don’t mean this unkindly but the perks you are "missing out on" are not for you because you do not need them. I don't begrudge your high earnings but you have enough. The cutoff at £100k is very very high compared to most people's financial status purely so that there is zero chance that anyone would genuinely struggle if they were at the cutoff. You are earning more than double that cutoff so you are genuinely ok without extra help.

I understand that you feel your position as a high earner is precarious. In thise circumstances I would be putting half my take-home pay into savings and fitting my lifestyle expectations to that income level, to ensure I had plenty of flexibility to restructure arrangements if the high income were to suddenly disappear. No matter what income level you are at it is always possible to live more frugally or more luxuriously, it's all just choices and people who feel they are struggling despite being on a relatively high income are simply living the lifestyle a couple of notches higher than they should be.

When it comes to the "free" childcare you honestly aren't missing as much as you think you are. The council-run nurseries where it is genuinely free, which are open only 9am to 3pm term time only, run on a shoestring with minimum staff and tured worn out equipment, aren't the kind you use are they? The kind of nursery you use which has longer days all year around, higher staff ratios and good quality toys and equipment, will absolutely certainly have a complex charging structure for people using the "free" childcare hours which ultimately translates as a relatively modest discount that you don't really notice.

It is heartening though, to see people are equally disgusted by extremely wealthy, wannabe benefits fraudsters. I was beginning to think MN just hated the poor, so this has low-key made my day.

No one is suggesting fraud though are they. And no one has asked about it.

I wonder if you and your husband might benefit from a few sessions with a really good qualified couples therapist who has experience of working with high earning families?
If you're married with a child all the 'family' outgoings should be a joint responsibility and for most couples equitabiity (in terms of time and remaining financial resource) is also key. So no matter who earns what initial income goes into a pot so that all expenses are covered (including childcare). Then agreed savings and investments/pensions are covered (no matter whose name they are in as this will differ depending on what's most tax efficient/what workplace pension offers are). After that each person gets what's left/agreed as disposable income into their personal account and they can do with that what they please.
This way no one has to ask the other/be subsidised month by month and long term financial plans are agreed and equitable.
For example Dh and I have separate pension provision but between us it's not 'his' pension or 'my' pension as we will both benefit so it's our collective pension. Likewise we are putting a monthly sum into an ISA in my name, but it's not 'my' isa it's ours.
It's worth mentioning that this is not just a 'how we see things' position but because we are married it's the legal framework. Our incomes, assets and liabilities are joint.
Your family loosing benefits is not your husband losing benefits its the marital pot... He's not loosing subsided childcare you both are. And as others have said you are way over the 100-137k black hole. If he's 'livid' perhaps he is actually livid at the disparity between you? Do you both have access to the same disposable income and standard of living?

This is really good advice @hettie

When my kids were young, the free 15 hours were universal as they benefited the kids most of all, not the parents. This meant the parent who opted to stay at home got it, as well as the high earner and the person who also went to the food bank. It was seen as important as school and useful for all as a modern society approach.

The OP could take her money and move to New York, Paris, Singapore, Dubai.. We are lucky to have her and the small number who pay most of the tax revenue in this country.

What next, means test the NHS and schools?

The 15hrs for 3&4yos is still universal.

Its the additional hours from 9mo that aren't.

I don't understand why you have to 'compensate' your husband for the benefits that he has lost. Do you have separate finances? You are still eligible for 15 hours free childcare irrespective of your income so you do get some direct benefits from the tax that you have paid.

Hey, thank you for this. What you are saying about the perception of value from financial advice is in line with my impression. In order to give advice or help on the difficult stuff, they’d want to also manage the easy ones (pension, which I have maxed out but in the past years I ended up totally or partially in tapered, Isas…). I understand the point about pooling finances, it opens up many more conversations and decisions. Many assume that we are not happy or have a financial abusive set up, it’s not the case, it’s just that when you bring different perspectives, it takes time to adjust to new circumstances

OK. At first I thought your husband was being a dick but now, if I understand it, its you. Do you really earn quarter of a mil a year but let your DH struggle on a low income and benefits? Is that what you mean by him being financially independent? And you have kids? Sounds like a crazy set up. Having completely separate finances only really works if you earn and contribute around the same amount. Do you take the kids to Mauritius and your DH go to Butlins? Does he eat at Wetherspoons while you are dining in Michelin star restaurant? Can't get my head around it

This is when you need to get smart. Your OH needs to now start over paying into his pension so you’re maximising that as well.

thank you, Hettie. If I can be completely honest, all the sensible things you mention are already done and he’s totally independent with pension top ups, is as etc. He is not seeing the money I make as ours or anything that can be relied upon in the long term given the low job security, unpredictable earnings, frequent discrimination by male bosses…

Such an interesting insight - thank you for sharing

There is a difference between having some good years and consistently earning a quarter of a million. And by financially independent I mean that he earns less than 100k, has a middle class family that will leave him some assets when the parents will pass away, has a bachelor and masters in economics from tier 1 unis. He’s not “on benefits”. We would not go on holiday to the fancy places, mainly because we like simpler holidays, and we just don’t have the time to go to expensive restaurants frequently anyway

The food bank wouldn’t be the issue, it would be the spouse that has the means to help me but is refusing that is the issue.

I wouldn’t be upset with the food bank, I would be upset with my spouse and end the relationship over it.

100%