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Original poster

Childcare when earning over 100k

167 replies

Bathroomwoes · 16/10/2018 15:21

There have been a few threads on this topic but none of them seem to bring together all the issues in one place. I'm currently earning just under 100k and am looking to change jobs. I'm looking for a sizeable salary increase to move and am mostly looking at roles in the 110-130 band (not actually received an offer yet but this is market pay for my level and role). What I've realised is that If the taxable income goes over 100k I lose 4k in tax free childcare and I also lose the 30 hrs free childcare I've been counting on, which I would otherwise be getting in a year. We're currently paying a fortune in childcare (combo of nanny and childminder) and I was really looking forward to actually having some disposable income again as we are having to be quite careful and put many costs on hold.

I calculate the total cost of those childcare support losses in the region of 7k. If my taxable income is around 123k then I'd lose my personal allowance too. Therefore of that 23k I'd effectively keep nothing?? I know I can mitigate by making extra pensions payments etc but that probably only applies up to a max income of 115 - 120k as I wouldn't want to be putting huge sums into pension. One thing that could help is leasing a low-tax model of car as we do desperately need a new car. Does anyone know more about how this works and whether it is universally available or only in some companies?

The issue for me is that If I go for one of these higher paying roles I will have to work harder and have less flexibility in my work. I'll need to spend more on childcare and more to manage our family life in order to hopefully maintain the quality of our family life. It's making me think I should actively avoid roles paying between 120 - 140 and only apply for roles above or below those salaries. I know it seems short-sighted but my intention is only to stay in such a role for a couple of years and then quit to do something completely different. Therefore it is quite short term decision and I'd like to make as much money as possible to make it easier to then have some savings for when I change direction. If I go for a 140k+ role I can't count on having any life at all so not really keen to do that but it is an option on the table.

OP posts:
Hideandgo · 16/10/2018 15:27

Who exactly do you think will be able to advise you here? I think you should speak with a tax accountant or financial planner. I personally can understand why you’d be fine with throwing money away on a car over putting it to good use in a pension?

Hideandgo · 16/10/2018 15:27

*cant

pinkhorse · 16/10/2018 15:30

Be careful putting it in a pension. Your annual allowance may be affected by tapering with salaries that high then you'll end up with a potential tax bill

Original poster
Bathroomwoes · 16/10/2018 15:32

I do plan to speak to a financial adviser if I go onto take on one of these roles but I'm just trying to understand in advance what realistically speaking my options are since applying for jobs while working in a demanding job is pretty challenging, therefore I don't want to waste time applying for roles that it's not worth me doing in the end.

I thought others on here might have been through similar and have some ideas and suggestions.

OP posts:
Walikingdeadfan · 16/10/2018 15:34

Do you have a partner? Could he do fewer hours so you have less need for childcare?

DryIce · 16/10/2018 15:34

Request at offer an 80% or 90% PT position

SillySallySingsSongs · 16/10/2018 15:35

As the average UK salary is 27-28k I very much doubt many have your sort of issues tbh.

Original poster
Bathroomwoes · 16/10/2018 15:45

Re car, my current car is very old and decrepit and also very small. Plus it wouldn't be throwing away cash if it has the effect of bringing my taxable income under the 100k

OP posts:
DistantVworp · 16/10/2018 15:46

I'm at a similar salary level and have had to do the same calculations, although my children are older so the 30 hours doesn't apply.

You really need to sit down and work out at what salary level you will actually benefit at, and then there's a series of choices.

So for example - 80% or 90% hours at the 100 - 130 level. It depends on the field and the job market you're in, but I have increasingly seen this. You wouldn't be making more money, but you'd have some free time and a bump in the 'grade' of job, which may be beneficial.

Or applying for roles in the 110-130 range - there any non-financial benefits (better salary progression, better promotion opportunities, more interesting roles)

Ultimately it shouldnt just come down to money but the whole package and impact on you, your career and family life.

Original poster
Bathroomwoes · 16/10/2018 15:47

I expect most don't and I am fully aware of the privilege of my situation but I also know there are many here with highly paid jobs or partners in highly paid jobs who may have some insights

OP posts:
E20mom · 16/10/2018 15:49

This is pretty much why I'm not planning on changing jobs (anytime) but definitely not until my little one has started school!

Original poster
Bathroomwoes · 16/10/2018 15:51

Thanks Drylce and Distant. I don't expect to be able to ask for 80 or 90% hours at their but it's something worth bearing in mind as a possible option 6 months down the line. A lot of the roles really won't be possible part time (I've tried in the past) but some may be.

It definitely isn't all about the money but if I'm working harder I will need some extra money to cope and have time to spend relaxing with family.

OP posts:
LIZS · 16/10/2018 15:52

You would still receive 15 hours of early years funding from aged 3.

Original poster
Bathroomwoes · 16/10/2018 15:58

LIZS that is really interesting, I didn't know that. I may only take up 20 hrs anyway (woth childminder) so the 15 hrs would pretty much get me there. Off to research! I'd still lose out on the 4k tax free element but useful to know I might not miss out entirely on the free hours.

OP posts:
Bellabutterfly2016 · 16/10/2018 16:36

If I was earning in excess of £110k I wouldn't be worried about free childcare! You earn more than enough to cover it!

I don't know any couples who earn that much!

Take some financial advice and stop moaning

PaulHollywoodsSexGut · 16/10/2018 16:38

Well done @SillySallySingsSongs

Saw this thread title and wondered who’d be the first snide commenter.

OP as @DryIce has said it seems that an 80% FT position is probably the best bet; just to allow you some degree of balance if anything

BritInUS1 · 16/10/2018 16:39

My guess is that this would be a stepping stone to a higher role and it's not a step you can miss out, so you may just have to suck it up, despite not taking home any more at that level

continuallychargingmyphone · 16/10/2018 16:43

Yep. God forbid a high earning woman asks advice.

Angharad07 · 16/10/2018 16:43

“Looking forward to actually having some disposable income again”!

Lower your living standards then...I’m struggling to live off 15k a year with one dc and I still pay my taxes. This is what you get if you earn more, it may not seem fair but believe me it is. Why should you get all that free childcare when you can actually afford to pay it Hmm

happyrayoflight · 16/10/2018 16:47

Why do you pay a childminder and a nanny? Can't the nanny do both ?

fulltimeworkingmotherof4 · 16/10/2018 16:51

I have a car through a salary sacrifice scheme at work and this is deducted from the bottom line, not all companies offer it so i would check if it's available. Also bear in mind it will affect your tax code.

Original poster
Bathroomwoes · 16/10/2018 16:56

The tax free childcare support I receive is not someone else paying for my childcare, it is a direct tax rebate of taxes I would otherwise be paying. The free hours are not funded directly out of my taxes in the same way but put it this way - I pay a lot of tax on the money I am then using to pay for childcare, which is a work expense. If I did not work I would not be paying it. Personally I think we should be able to pay for childcare out of gross income and help more women stay in work and also enable people to pay well for childcare which is such an important role but generally very poorly paid.

So I am not ashamed to want to retain the meagre childcare support I get to enable me to keep working. I would not engage in aggressive tax planning for any other reason but I think the current system in the UK is wrong.

OP posts:
Original poster
Bathroomwoes · 16/10/2018 16:57

Re nanny and childminders I have a nanny some days and childminders others because a full-time nanny would be too expensive (although that would be the ideal scenario as my work is very unpredictable and can involve long hours)

OP posts:
WakeUpFromYourDreamAndScream · 16/10/2018 16:59

110K a year and you have to make cutbacks and want funded childcare. What a joke

Goingonandonandon · 16/10/2018 17:04

I am sure you have checked but not all childminders offer the 15 hours of funded childcare. It's a very different method of administration for them compared to the 30 hours. and it's not means tested.

you are absolutely right about the system being wrong. Childminders get on average £4.11 per child, per hour for funded childcare. It's massively underfunded by the government, and it's one of the reasons why I stopped childminding.