Need help to estimate living expenses coming from abroad

[scubacat2292]

Hello Mums! My family (me, husband, 3 kids) are looking to move to the London area in the next few months as part of a job transfer. We've just found out my DH's salary, and are having a heart attack over the amount of taxes we will pay. My first question is does everyone really pay the taxes the tax calculator says, or do we have any chance of getting some of that money back at the end of the year? He would make enough to get us into the 40% range, but the calculator didn't offer me the option to add in 3 kids, so I'm wondering if I can count on any sort of return there? For example, here in the US our tax bracket is technically 32%, but once we get exemptions for our mortgage, kids, sales tax, etc, we end up only ACTUALLY paying closer to 12% or so. Any chance of that happening in the UK, or should I really count on 40%?

Second question is that I would love to get some idea of what my regular expenses might be? We are looking to find a 3 bedroom flat or house in a good neighborhood. I'm hoping to find something for around 1500p per month. I don't know if that's realistic, but I've checked out some rental sites and it seems possible. If we can make that happen, it comes out to 35% of his take-home pay. What would the rest of the monthly expenses come out to? Somebody mentioned council tax - what is that? Also, I assume I need to pay water, garbage, sewer?, phone, cable, internet, electric. Is there a way to get an idea of what the costs of these might be so I can determine if we will have enough money?

Thanks so much for any help!

Water is around £500 per year, paid twice yearly.
Gas and electricity is costly, we paid (£1800 last year, in a rented drafty 3 bed house with single glazing).
Council tax vary from area to area, with Wandsworth (£70 pcm for three bed) being the cheapest, and Richmond (£360 pcm for three bed) the most expensive borough to live in. Council tax covers garbage, sewer.
There are various deals on phone and internet, often coupled with tv. It depends on the speed you need, and how much you download.

We have freeview on our tv (rather than satelite or cable), so bought an antenna for £50. Tv license is around £8 per month. Plus we have a love film subscription costing £13 per month, where you can watch all sorts of movies, and rent 2 discs each time of either film or game!

What area are you looking at? Do you need to find a school? State schools in the UK vary a lot. Private school will set you back between 3-4k per child per term. Or nursery?

and tax is actually more than 40% if you include national insurance.. the tax here is based on salary and is not reduced by the number of kids so I would stick to expected minimum of 40%

For family of 3 would assume about 100 quid a week for all house expenses of food cleaning stuff, can be done a bit cheaper with very careful shopping but not much more .. council tax is the local tax to pay for police lighting garbage

Expect to pay 1500 gas and electric - 500 water rates a year.

I would expect you pay another 400/500 or so in bills each month - gas/electric/council tax/insurances/telephone. Say 400 for food and you would have 1000 to live on .. doable if you do not have big nursery or private school fees

Tax is tax. You dont really get it back. You dont get any refund, for having children! How strange! Surely children cost society more (in terms of providing schools, free national health service) than a couple without children?

As zen say, in addition to tax, your dh will be liable to pay National Insurance - which goes towards pensions. Usually 3.7% of income, if I remember correctly??

Will you be working too? How old are your children?

Okay, the tax calculator already accounted for the national insurance, so our take home pay was accurate. We will be putting money into his pension and getting a beautiful match from his company, which I already figured as well. I'm confident that our take-home numbers are accurate assuming we get nothing back.

NotQuint - in the US, there is no national health service and you pay for schools out of your property taxes (so the nicer the homes, the better the schools). Kids are considered more expensive since they cost a fortune to feed, clothe, and keep happy. :) They let you deduct some amount from your taxes for that - not a huge amount. There is NO DOUBT that we pay a ton less in taxes here in the US.

I don't expect to be working. I don't here in the US (managing three boys and the household is work enough thank you!) and if I did it would have to just be part time as I'm not interested in leaving the kids in the middle of such a bit transition. The boys are 7, 10, and 13 and two have mild special needs, so that takes a lot of time and attention.

As for schools - can't afford independent, so state it will have to be. I am very concerned about finding a good placement for my oldest son who would be in year 8 there, especially since will have missed all the deadlines for getting into a particular school. We will just have to do the best we can.

I've been told Guildford is beautiful. My husband will have to commute to Holborn station, so we're thinking Kings Cross for train. I've been told to look up north, but have so far been so focused on Surrey that I have no idea where to look towards the north. Recommendations are welcome.

I dont know anything about the north, neither about trains to Kings Cross.

Have you checked out monthly travel fees for trains?

Many Londoners now opt to cycle to work, getting exercise, and this way both saving transport costs and gym memberships.

Living so far outside London as Guildford (another town) can be both expensive and time consuming. I recommend the borough of Wandsworth, with good schools, low council tax (garbage sewage), great parks and green areas, and train to Waterloo where he can change to the tube for Holborn, or walk to Holborn from Tottenham Court Road tube. Or cycle to work!

Hertfordshire has some lively towns and good schools with transport links into Kings Cross. Bucks is a bit further west but grammar schools if your DCs are very bright.

In terms of expenses: tax, national insurance and pensions are all taken out of your DH's salary before he gets it. Out of the rest, you will have to pay water rates dependant on size of property; council tax dependant on area and size of property; gas; electricity; food; transport and food. Council tax covers rubbish removal etc so no other charges for that.

Sales tax of 20% (vat) but this is included on the price so you don't need to add it.

NatashaBee - I'm pretty sure our income would be too high to qualify for tax credits. I did look into that. But I believe the benefits website said we wouldn't get anything anyway because we're not UK citizens.

Thanks for the town suggestions - I will look into Wandsworth, Hertfordshire, and Bucks. No grammar schools for us. They are very bright, but I'm not sure I'm interested in the whole entrance process and such. We plan to be in London for about 2 years, and then we'll likely return. My biggest concern is my 13 year old who needs a good secondary, and I understand that it's hard to come by a good secondary unless you live on its doorstep. I do worry about that party, but can't afford independent.

We're basically just trying to figure out if the move is the right thing for our family. We have a truly wonderful standard of living out here - good schools, beautiful home, two newish cars, a 15 minute commute for my husband, lots of extra money, the ability to store quite a bit away for savings and retirement, friends, security, etc. Making this move would mean a major pay cut, a significant drop if our housing situation, a significant need to get rid of all of our luxury expenses in order to overcome the pay gap, everything costs more, a much longer commute, unknown schools for my children, no friends or relatives to assist, etc. It sounds crazy, right???

HOWEVER, we would then gain the amazing life experience of moving to a new country, exposing our children to other cultures and world views, the chance to explore England every weekend, and the ability to travel to all of Europe much more cheaply (plane flight to London from here is over $6000 US for the five of us). I can't figure out if it's the right decision or not!

Go for it! It is 2 years, and a chance to visit not just one, but many different cultures!

I will PM you.

NotQuint: "Tax is tax. You dont really get it back. You dont get any refund, for having children! How strange! Surely children cost society more (in terms of providing schools, free national health service) than a couple without children?"

In the U.S., you can tax credits for having children. The more children you have, the more tax credits you get. It isn't a lot-something like $1,000 per child-but it's something.

scubacat: We're in the same boat you are. We're relocating from Los Angeles to Guildford, which is outside London.

Hubby and I are also in the process of understanding the UK tax structure. As far as I can tell, there's no such thing as "household income" and every adult submits his/her own individual tax return, reporting his/her own individual income. And, if I understand correctly-feel free to correct me if I'm mistaken-your husband's income is not your income here in the UK, and you can have trouble establishing your own credit if you don't have your own earned income.

All this makes figuring out our real tax burden somewhat challenging. As far as we can tell, we'll pay just about the same in the UK as in the US, once you add in the cost of health insurance premiums.

ZZMum: "the tax here is based on salary and is not reduced by the number of kids..."

Really? So many differences between the two countries. In the US, you can file your tax return as a "household" and the total income will be the total income reported by the "household" (e.g., both parents' incomes), and your get a certain number of exemptions (tax deductions) based on the size of your household; the larger it is, the more your tax burden is reduced.

VintageRainBoots - Congrats on the move. We are looking at Guildford also, but I'm not sure I want to pay the huge train/tube payments for him to get into work every day. Turns out the business is moving to a new building in a few months near Chancery Lane station, so now we're thinking maybe north out of Kings Cross is the place to check for housing.

As for taxes, I don't work here in the US, so his income is our income. I spend all my time managing three young boys and the household - it's a lot harder than it was to go in to work every day! I'm not sure why I would need to establish my own credit.

We used the take-home tax calculator here: www.thesalarycalculator.co.uk/salary.php

Our numbers came out to NOTHING like what we pay here. The taxes are huge there. On the other hand, our company has also had amazing benefits and we pay no health insurance premiums.

scuba, I did the SAHM for a few years and until I nearly went crazy. I applaud your commitment to it; I couldn't do it. Instead, I returned to school to finish my PhD in physics.

I can safely say that a PhD in physics is a lot easier than being a SAHM.

As far as taxes are concerned, we compared state taxes + federal taxes + health insurance premiums (and subtracting 403(b) contributions + IRA contributions from our taxable income) to our anticipated UK tax burden and they seem relatively close. Like, close enough that we're not too worried about it.

As far as rent is concerned, £1500 pcm is the range we're looking at, too. It looks like we'll have no trouble getting a place for that amount, but the places are not going to be comparable in size to a similarly-priced place in the US.

Our family expects to stay in the UK for longer than your two years, so our ultimate goal is to buy a place. We've saved $150,000 for a down payment (deposit) on a home-a respectable amount in the US-but we're not sure if that's going to be enough to get a place we want to be in permanently or semi-permanently.

Good luck on your move! Perhaps we'll bump into each other in Guildford.

Natasha, what if some of your income comes from investments, or in my case, from fellowships or stipends while doing graduate study?

In the US, it's PAYE, too, but every adult still must file a tax return on his/her behalf; our employers don't do it for us.

I think staying at home is one of the hardest jobs out there! But with two of my boys having mild special needs, it was the right thing to do. Just don't ask me to homeschool!! LOL How many kids do you have?

What are you doing for schools for your child(ren)? We can't afford independent tuition so we're going to have to play the state school roulette and hope for the best. It's such a complicated system there!! I'm most concerned for my 13 year old who would be in secondary and I've heard the state secondaries leave a lot to be desired.

Yes, the housing will be much smaller. We live in this huge 5 bedroom, 3 full bathroom home in the suburbs of seattle and it is going to be a shocker to my kids when we move. We're thinking three bedrooms and 2 toilets somewhere in the house will be a must, but that is still a major downsize for them. I actually think it will be really good for them.

NatashaBee - our employer offers us a tax advisor the first year, so that should help.

Most people don't have to complete a tax return, but some must, and some are chosen at random to have to fill one in.

To get some idea, read this www.hmrc.gov.uk/sa/introduction.htm
and then follow the link to 'do you need to complete one?'

I think that up to some point in the late 20th century we did have household level taxation, and allowances for having children. In fact a bit of googling brought this up
"And between 1977 and 1979, child benefit replaced the Family Allowance and Child Tax Allowance."
So, your problem is the tax allowance which I assume applied to all taxpayers, was replaced by child benefit, which I gather you won't be eligible for.

On the subject of paying for water supply (and sewage disposal) most houses pay a fee roughly based on the value of the home, but there is the option of having a water meter fitted and paying for the volume you use. I think once a property has been switched to metered supply it can't go back to the fixed fee system. The rough guide often quoted is that if the place has fewer people than bedrooms a meter is likely to save you money.

I can recommend St Albans where I live as an excellent location for good state schools, shops and a regular railway service into North London (St Pancras). A modest 3-bed house will set you back about £1600/month. Budget £500/month for council tax (£2000/year), utility bills, telecoms, insurance and so forth. A season ticket for the train is about £360/month unless it's included in his salary package. You'll find groceries and petrol much more expensive in the UK than the US.

Tax is tax unfortunately. You can get tax-relief on pension contributions and charitable donations but there are no rebates for dependants and you would earn too much to qualify for Child Benefit or Tax Credits. There is extra tax to be paid for perks provided through employment e.g. travel, company car, private healthcare. Good luck

"I'm not sure why I would need to establish my own credit. "

If you need your own credit card.

I have learnt from American Movies that people brandish about their dads and their husbands credit cards A LOT (they might not do this in real life)

Not sure you can do that here! But you can open a bank account, and have a debit card, which works well - you spend money you have as opposed money you dont have!

There are LOTS of GOOD state secondaries if you look hard, especially in affluent areas (which there are many of in London). The problem might be, as renters, rather than home owners, you are limited to your husbands income, and you might not be able to afford better.

When I came to London as a young student, I thought everybody lived in small cramped flats, and small 2 bed cottages, that is what I saw as a student!

However, there are wealthy/affluent/rich/insanely rich people in London too!
You would be one of them if you sold your house in the US and bought here, I imagine. 5 bed houses in affluent areas are between 1.5-2.5 million pounds and up.

Like you say, it will be a learning curve, and an experience for life for your kids!

We had a fantastic house in Norway. It was a massive downgrade coming back to the UK (we did not sell our house in Norway), but unless you make a point yourself about the "hardship" of only having two bathrooms, the kids wont really notice. Kids dont really pay attention to these things, unless they are influenced by us!!

We have a joint bank account, and join credit cards here. I just assumed we would do the same there. It's one account, we each have cards in our names, and the bank doesn't really care who puts the money in. :) Well, I supposed they did need proof of income, but my husband's income was enough to give us the credit and we both got cards with the same number, just different names on them. Luckily, my husband's company will help us set all that up so you're right, I'll just have to see. : )

Affluent areas are tough because we can't even afford the rent in those areas. And there's no way we can do independent tuition for three kids!!! What do you guys think of Claygate or Hinchley Wood areas/schools/standard of living? It's a nice short commute, and we like Surrey.

Surrey is nice ( well parts of it) but awful journey to Chancery Lane. Absolutely horrible. Massively overcrowded trains, 2 tubes plus walk or probably 30 mins walk. Essex (so on central line) or somewhere going into kings x would be better.

Hope you enjoy the UK. You will have the NHS which is a wonder and it is absolutely free. You will find some very, very good schools which are totally free. Amazing culture and great chances to travel round Europe. (You could even come to Scotland).

Don't think it is all London, though. Lots of the places mentioned on here such as St Albans and Guildford are NOT London and have a very different feel. But there are some wonderful places in London too. Wandsworth / Clapham would be my choice were I to return. Good luck with your move.

Does the UK allow "joint" credit cards?

I dont know. I think debit cards for joint accounts is allowed, but I dont know about Credit cards. (Never tried to find out, been married 15 years, never had a joint account!!)