How much do I need to earn?

[jwitt73]

Hi everyone, I am planning on returning to work in October when my eldest starts school. I have three kids (4, 2 and 9 months) and took redundancy from my job just before second was born in 2011. I have been freelancing since then but now want to get a regular (better paid) job. I expect I will have to employ a nanny full time if I get a full time job (looking for part time but may have to do full time). I live in London. How much do I need to earn to make it worthwhile? When do the tax credits for childcare become available for working parents? Any advice gratefully received as I don't really know what to look for yet!

The going rate for a good nanny in London is currently £15 per hour.

Work it out from there. Plus take into account commenting costs too.

Are you a single parent or do you have a partner's salary to take into account as well? How much are you expecting to earn roughly?

Thanks all - it's more guessing a ballpark figure to cover childcare - my husband works, but I also want to start doing something part or full time. It's just guessing roughly how much covers a full/part time nanny after tax and all that. If childcare is around £100 a day for all 3 then that's 2K a month, so I'd need to earning £35K plus???

Can you not work around the kids while you get started?
Evening, nap times, stuff like that?

I don't think you can claim childcare tax credits for a nanny.

And with 2 full time salaries you would probably be over the tax credit limit anyway.

Not knowing any further details then yes I'd say you need to be on £30k minimum to break even paying a nanny. Some women do this (work unpaid) for a few years to keep their careers going so that once all DCs are in school they can keep their salary again.

You can see why the system's rotten isn't it?

My experience is nursery is cheaper even with 2 kids, although less flexible. You'd be surprised on the salary you need tho- take off pension contribution and any tax on benefits and you may find you need to be well over £35k in London. With a larger employer you should be able to get childcare vouchers (both of you) and boy do they make a difference. You are going to be looking at ball-park £1400pcm per child in daycare 8am-6pm (you can find cheaper and also more expensive). With your middle child the council will subsidise some of the nursery hours (15 per week, term time only) but the rate is likely to be considerably lower than the per-hour pro-rats rate your nursery charges. Bottom line, you need to be clearing a good £2.5k Pcm to cover childcare, commuting, your lunches and lets be frank the second "work wardrobe" doesn't even come into that!! By my analysis your likely to need c. £40k gross salary- but I'm no accountant so suggest doing some sums.

Pro-rats!! Ha ha- DYAC!

desperate but £40k gross doesn't net you £2.5k pcm unless you are talking gross again. Haven't got a tax calculator but you need more than £45k gross.

There are more costs than just the salary the nanny earns, so I think you need to firstly calculate a realistic figure for how much a nanny would cost. I agree that a nanny in London could be on a salary of 15 gross per hour.
A full time nanny may be doing 60 hours a week, how many hours would you need them to be working per week?
There are costs of activities/outings, some additional cost in food, cost of public transport/mileage if nanny uses their own car to transport your children, employers national insurance, payroll costs - or would you do that yourself?

A nanny would be paid from your take home pay, so you would need to work out what gross salary you would need to earn to get that take home pay, if you are viewing childcare costs as being solely your responsibility. You need to calculate what your costs of going to work would be, such as travel to/from work, lunch, clothing, socialising with work colleagues.

I would not look at tax credits as you are very likely to be over the earnings amount. Tax credits can be used towards the cost of a nanny in England if the nanny is registered with Ofsted. That costs and does not really benefit the nanny, so employers often end up paying the registration cost.

With 3 children a nanny does make sense but the cost will be high.

Fine OLTT- as I said, not an accountant.

Don't worry desperate I know the figure because that's how much I earn. (Minus childcare vouchers and pension contributions). I know I don't take home £2.5k. I remember using a nanny tax calculator and worked on the basis of £12/hour before tax and 60 hours a week. It came out with something ridiculous like just over £3800 a month to pay a nanny at that price. And this has to be from my take home pay obviously. I'm in Hampshire, and the nanny's are around £12 net, so it's obviously higher if we have to agree to a figure so she'll get £12/hr after tax. It's after that I decided I can't afford a nanny with 2 children at nursery.

In comparison, nursery is £1k per child including food and activities. It looks like at least in my area, you need 4 children to make nanny cost effective. However, you do gain the benefit of convenience if you can afford one. I wish I could.

Here's a nanny tax calculator to work out how much it cost you to pay a nanny. That's obviously excluding activities, food, mileage/transport.

www.nannytax.co.uk/Calculators/employers-net-to-total-cost.html

Just had a play with it, it seems my £3800 a month figure is from £10 net an hour (£3846.00 a month and £46152.00 a year). At £12/hour net, it's a staggering £4860.00 a month and £58319.00 a year! I wonder how much do I need to earn just to get that much take home pay? £80k? £90k?