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)

thank you for saying this. I do believe in a society where everyone gets access to basic services like childcare and healthcare. The threshold for the childcare benefit is a multiple of the average salary so it’s not only for people in financial difficulty

Whatever 🙄

If this is a genuine post I would recommend you speak to a financial advisor about tax (not benefits!).

And have a long, hard think about your husbands common sense and intelligence.

I can’t even IMAGINE how tight you both must be if you’re trying to to hide £160k to get free childcare, you must live an extremely frugal and miserable life coz NO WAY would anyone normal even consider this to be a problem .

Maybe give up your job and let someone have it that will actually appreciate the money.

Sometimes people on here really don’t read the room 🤷‍♀️

Thanks. I would add that within living memory (and within the working lives of many politicians still sitting in the Houses of Parliament) childcare was regarded as a purely private matter, entirely for families women to handle by themselves. There were a couple of initiatives in the late nineties but it only significantly changed with the New Labour government and the introduction of the free entitlement to early education for three and four year olds.

Maybe paying for a divorce might bring your income down a bit. Your husband sounds like a complete cunt. Well done there!

You earned £260K, your husband is earning and you want to find a loophole so your child can get 30 hours free child care? Surely if you don't come from money, you understand that you getting free childcare that you really really don't need will mean that there is less in the pot for children and families that are in dire need? It's not even as though you are just on the threshold of losing your free childcare entitlement. You earn over double that amount but you are still unwilling to pay for your own childcare.

After that pile on, it would have been better to pay a FA the 3% OP!

A parasite is something that destroys. This woman, like most high tax payers, is on balance putting in more than she could ever take out. The opposite of a parasite. The system is dependent entirely on high tax payers.

How much do you think I pay in tax?
why if you pay tax, you get access to support for your family and if I pay multiples, my husband who is financially independent needs to swallow that either he pays substantially more than he should at his salary level or he needs to ask me to cover the difference. Which leaves me in a position where I pay huge taxes (and lose allowances to pension contributions as well), I pay all childcare, I need to compensate my husband for the benefits lost…

The only reason I have the arse with questions like this is because I'm a childminder and propping up the gap for claimants earning ridiculous amounts whilst I'm no longer allowed to ask you to pay a top up for the government poor funding rates.

I actually agree with you re universal offer. I don’t agree with the husband point. You’re married. You’re a joint entity. You should be covering him. That’s how it works. If you want the benefits of not being married. Don’t be married. I am happy to pay tax and benefits for others. I’m not happy to pay tax as some kind of weird spousal support because your marriage is warped.

I need to compensate my husband for the benefits lost…

Can't you do that out of the £260k?

That's bullshit! The UK Isn't the place where rich ppl are worse off, and then leave because of it.

Just for comparison, in Belgium:

0 to €15,200 25%
€15,200 to €26,830 40%
€26,830 to €46,440 45%
In excess of €46,440 50%

Income tax in Spain:

€0 €12,450 19%
€12,450 €20,200 24%
€20,200 €35,200 30%
€35,200 €60,000 37%
€60,000 and above 45%

Income tax in England:

Up to £12,570 0%
£12,571 to £50,270 20%
£50,271 to £125,140 40%
over £125,140 45%

So even when you do the £/€ conversion, you can see that the UK isn't worse off income tax wise. Most of Europe (yes I know I only put 2 other examples, but hey) have much lower thresholds for higher tax.

Also, some of us would criticise extremely high income earners (like £240k!!) applying for PIP. I don't think PIP should be means tested because then you get situations like a lone parent on £90k living in London can't apply but will still struggle, but I really think people on incomes 10x that of some families should reflect on whether they really need a state benefit that is intended for severely disadvantaged people.

People don’t go to those countries when looking to pay less tax.

Obviously. Looking for countries with a higher tax rate is clearly pointless. You need to look at ones with lower tax rates. But also their tax deductible schemes.

Ignorant.

Well yes...you are a household. Surely you need to combine finances when married? I'd be spitting if my 'financially independent' husband was about to earn a quarter of a mill in a year and yet I was still reliant on benefits. Is that even possible? Do you just end up walloping loads into savings while he claims benefits to help pay his 'share'? Does he work? Share child raising responsibilities etc?

These benefits exist to try to even the playing field just a teeny bit so that those with low incomes and middle incomes can also afford the great things high earners can afford.

Would you rather the benefit was reduced for everyone so that it was the same for you? There isn't an infinite pit of money so if everyone gets this benefit it would result in less for each family. You could afford that. Many families couldn't.

Can't you be glad that you have enough money and that you can contribute to a fairer society where children from families living in poverty get help?

Thank you for saying this.
and to the people abusing me here, by the way, I grew up in financial difficulties, I have seen my parents cry because they had no money to pay rent growing up or had utilities cut or people chasing and threatening them for debt to be repaid. Multiple times.
and that’s exactly why I would not give up on my financial independence I am million years

You can’t have EVERYTHING, how selfish of you. Rich people don’t have a clue about the real world.

I think a lot of people are misunderstanding that people want to optimise their tax position - and this tends to escalate once you are paying 50%+ (as many with student loans will be doing from £50k).

As another poster described, with two children you could easily have an 80% effective rate between £100-200k with two children in nursery, including loss of free hours.

This makes you very incentivised to change your behaviour to get more at the end of the month. This is all entirely legal.

Only the other day there was a poster here saying they would go part time after mat leave on a ~£200k income as the value of childcare for two plus pension additions, less the day less childcare a week they needed, left them better off financially in the long run.

If you tax people at such high rates, they’re going to look for ways to reduce that tax burden.

It's not everyone else's fault you don't know how to do family finances between you.

Not true. Those on high salaries pay a lot of income tax. That’s not remotely the same thing as the rich paying a disproportionate amount of tax. There is plenty of scope for money to be taken out of the reach of the taxman, which is what the genuinely wealthy can afford to do. That is, after all, what the OP is asking about, because they know it is possible, they just aren’t willing to pay for the advice. And it’s because the genuinely wealthy have so much money that they are not reliant on a salary to make ends meet that income tax keeps going up and up, because PAYE income tax is the hardest tax to hide from - the result being, those reliant on salaries to survive, not the truly wealthy, are paying a disproportionate amount of their wealth in taxes.