This can't be right? Need to earn £45k to cover cost of FT nanny?

[BrummieOnTheRun]

Someone please tell me I've cocked up my calculations because I'm desperate to go back to work!!
I've tried 2 online 'nanny tax' calculators which tell me I need to add about 49% to the nanny's ?8/hr to cover the nanny's tax, nanny's NICS and employer's NICs.
And I've assumed about 33% of my income will go on tax and NICs.
Nurseries aren't working out any cheaper as it's for 2 children under 2 and they have added hassle-factor.
Am I massively miscalculating? I bloody hope so!

oh parp.
had enough of mn anyway.

will go off and count my nhs money with the rest of my overpaid over-perked colleagues.

I'll just list my perks in my job

No pension
No Maternity package
No Christmas party
Basic holiday entitlement - 20 days
Basic statuary sick pay
Oh and by Friday i'll have worked 77 hours this week. I totally agree with all your issues regarding being taxed twice, totally out of order. But to be honest you need to earn the money we nannies earn (am speaking as a nanny who lives in London)to actually survive here as it's so expensive and unless i can save a huge amount for a deposit on a flat i have no hope whatsoever of getting on the property ladder. Unless Mr George Clooney comes to my aid and marries me

Why are we all fighting on the same side? Whatever people in the NHS get or don't get it will always be expensive to pay anyone a fair wage. Why can't we be pleased for the NHS people that they get what they get (if they do get it) and campaign for more like that, instead of resenting people.

I think a campaign to get Childcare costs to be a permitted tax deduction for EVEYONE regardless of if they are employer or self-employed would be good. Perhaps this could be the next general election vote winner - any political party want to take this up?

Anyone know how it works in the USA?

How could it work in the UK, given that employers process tax deductions from salary.

What advantages would there be? For one, there would be a national register of childcarers, as in order to claim back the expense, some audit trail I feel would be needed so that someone isn't able to get the benefit, without actually paying for childcare.

Any disadvantages / major issues?

I hear what you're saying, jura, but at the moment the treasury must be missing millions of pounds in tax revenue from women who can't/won't return to work because childcare costs make it financial unviable.

Presumably it would also create more jobs in childcare too because demand would increase.
At the moment, they aren't getting a penny from me in tax, and won't unless I can find an extremely well paid job.

Nannynick - I don't see why your system wouldn't work...surely it's an extension of the current voucher scheme. Not sure how you create the audit trail for nannies, but it can't be bloody rocket science, surely!

Brown should focus more on the up-side in terms of employment opportunities, and less on closing potential tax-avoidance loopholes. The current insistence on nannies being on PAYE, turning 'normal' salaried employees into employers as soon as they hire a nanny, (with all the associated admin) is farcical.

Watching Cameron with interest and I NEVER thought I'd say that!

Not sure where the idea that the US has totally deductible childcare comes in. The deduction is limited, and you don't get anything if you earn more than $55,000, so it definitely doesn't cover nannies. Certainly I understand that theUK voucher scheme is more generous than the US entitlements.

I doubt that any Government is going to attempt to fund a nanny tax credit - the economic answer is to have shared childcare to get fewer people looking after more children, hence the potentially fantastic subsidies for nurseries. And changes in work regulations to allow parents to work more flexibly in order to access this less flexible form of childcare.

In the USA, you deduct the cost of childdcare from your income before the tax is calculated. So, everything you spend on childcare is exept from income tax. If you hire a nanny, you don't have to be her employer.

What we should all say to Gordon Brown is, "Do you or don't you want people to go back to work?"

Jura, there is another option. Gordon could always learn to spend a bit less. You say he would "lose" this money which seems to imply that it is his in the first place...

IT would be interesting if David Cameron could come back to Mumsnet specifically to address the issue of the affordability of returning to work.

Can nannies not be paid using the voucher scheme? Personally I think before they increase the limits they should stop it being voluntary and make it a compulsory benefit. It really annoys me that my work offers it, and because I am part time I am only paying 22% tax, but DH is paying 40% tax but he can't get the vouchers. If we could both get them we would be saving a lot more, in fact nearly all our childcare costs (somewhere between £500 and £600/month) would be tax free. This is for 1 child at nursery and 1 child with CM before/after school and in hols 3 days/week.

I'd second that invitation to Cameron. And can we give Harriet Harman another chance to address the topic. I would find that extremely interesting because so far she's only produced patronising political waffle (and they criticise the tories for lack of substance).

What AlWAYS happens, though, is that the "want the right to stay at home" lobby clashes with the "want to work" lobby, diluting the strength of both arguments. They both need to be addressed, but probably separately, otherwise the inability to solve both problems with the same solution risks neither problem being resolved. [that was clear as mud, wasn,t it? ]

Uwila - are you sure? I can find lots of articles on the US Child Care Tax credit (which is limited as outlined below), as well as letter to the NY Times as recently as November calling for a tax deduction for nannies?

This article suggests that the deduction is limited . And this indicates that you still need to be an employer if you have a nanny?

Hmmmm... I could be wrong. Just going on what a friend told me.

Oh, and you're right about nanny employment status. I'm obviously out of touch with the homeland...

can you parp without having posted?

OK

parp (big time)

it's not only the NHS who get those perks - lots of our friends in the civil service got fantastic benefits too (1 year paid off, option for a 5 year career break). I don't resent that, it's just that most people privately employed don't get those sort of benefits and it's our tax money that funds theirs! Having said that, I don't begrudge NHS employees their benefits one bit.

and tbh it's not only childcare costs that hit home - it's the double whammy of high housing costs + childcare costs that really hurt. If you think about it, £18-22k (what a nanny earns) is not exactly a massive wage - it's just that paying that AND housing costs out of after tax income leaves most people with very little to live on.

Absolutely, fox. I think most of this thread is about problems that are a knock on effect from theoutrageous cost of living. Housing, childcare, school fees, an NHS that doesn't deliver value for money...

And, incidentally, when I air my gripes on the NHS I am generally talking about the the organisation from the top and not the (usually underpaid) medical professionals actually doing the work.

totally agree, but very hard for govt to solve high cost of living as so many factors are at play. I don't believe it's difficult to solve the back-to-work affordability issue. It just takes political will and vision.

couldn't you just increase the current voucher scheme to a meaningful level and extend it to nannies? and couldn't that just replace the means-tested tax credits that don't currently work anyway and cost a fortune to administer? thinking out loud.

I think it's very difficult to solve.

You need to pay childcarers a living wage - they, in turn, need to pay tax/NI on what they earn.

I can see why childcare costs being tax deductible sounds appealing (and would love that in practice!) but how would it ever work? You would get people inflating the cost of childcare to pay less tax, you would get fictitious childcarers - it would be a total nightmare to police and I bet the tax coffers would not rise as a result of more people going back to work.

I think they should extend the voucher scheme - and make it compulsory for companies to offer it to their staff (I know small business would hate that but they should see it as a staff perk).

Jura, I know it's thinking really far out of the box, but we could always spend money more efficiently. Like, uh, get on top of those MP expenses for starters. Efficiency is what I think. When private industry isn't making money they downsize. Perhaps the government might consider downsizing??

I mean, do we really get value for money. Let's not forget things like the CSA which costs more to run than it pays out. What a joke!

And how about things like in order to get a prescription refilled, I have to go to my doctor, drop off apiece of paper, wait for her to make a new one and give them a self addressed envelope so they can mail it back to me so I can go to the pharmacy to get if filled. If I was in the US, I would ring my doctor who in turn would ring the pharmacy and my prescription would be ready for pick up within the hours. Inefficiancy!!

Bozza - I thought nannies could be paid in the voucher scheme though I think you have to make sure they are registered as a childcare provider - I'm not sure how much that costs

Also I claim vouchers to pay my childminder and so does DH (his employer does them). If your dh's company does the vouchers you can both claim.

Finally if you use a nursery who is registered with this scheme
teds scheme (and quite a lot are) and you can convince your employer to sign up with this scheme (costs them nothing - there is a small fee but that is recouped from the savings they make on paying your NI) you can save between 22-40% on nursery fees depending on the level of tax.

My employer does this and when I was using a nursery I saved 40% on the fees. Now we are using a childminder and it is much cheaper but we still get tax relief on £486 a month (£243 each).

The problem is not that the tax savings can't be made but that many employers can't be bothered to implement the admin required to do this.

Vouchers are valid with a nanny if she is registered with the Childcare approval scheme

here for details

costs £99 a year (renewable very year)