Childcare when earning over 100k

[Bathroomwoes]

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.

I hear you. It’s a bit of ‘diamond shoes too tight’ from an outside perspective but for me, I’m currently 80% hours and if I went full time, by the time I paid for the extra childcare and the extra tax, I would have less money in my pocket and (obviously) less time with my children too. So not much of an incentive to work more.

I think you may be surprised at the possibility of doing eg a 9 day fortnight, particularly if you are more flexible about the day you want off eg any day but Friday! And be pragmatic about advance planningyour calendar around must have dates to be in work that would otherwise fall in your day off.

Thanks fulltimeworkingmother. I guess it may depend on the individual company as to whether they offer it.

In terms of the disposable income comment, perhaps it helps to explain that I am currently not working full-time hence the FTE salary I have mentioned here is not what I'm actually earning, plus I just received a significant raise which has brought that FTE up to the amount i mentioned. Therefore my actual salary has in recent times been a fair bit less. I consider us to have a good standard of living but we do not have the cash for costly essentials like basic housing stuff and holidays to see family abroad. I'm by no means complaining but I don't want to work harder and potentially have a worse quality of life for no more money. That would just be stupid

I'm pretty sure my childminder offers the 15 in addition to the 30. I've already said I'd top her up to her usual hourly rate as I wouldn't expect her to take a financial hit in order to do me a favour.

If I do a 9 day/fortnight job I'll still have to pay the full-time childcare but no doubt it will be a massive help to have that day to myself to catch up on life admin and have a bit of a rest, especially if I'm in the same financial position as working full-time. Lots of good suggestions, thank you

Sympathies OP, there are so many unintended adverse financial consequences once you get into that earnings bracket. Best thing to do is to punch straight through it and get a full on job and pay a full time nanny

Probably too late as I think schemes are closing but we use childcare vouchers

And yes to 15 hours

To be honest my game plan isn’t to stop in the next few years so pushing on through

Do you get a bonus with these roles? Can be a hit if calculated off a PT wage, worth considering, similar to pension contributions from the employer

Probably too late as I think schemes are closing but we use childcare vouchers

And yes to 15 hours

To be honest my game plan isn’t to stop in the next few years so pushing on through

Do you get a bonus with these roles? Can be a hit if calculated off a PT wage, worth considering, similar to pension contributions from the employer

My DH and I have a combined annual salary of over £100k.
We have 2 children who need wrap around childcare (3 and 7 yrs).
The 3 year old still gets 15 hours a week so that's a great help.
We both get childcare vouchers, I am the lower earner so can get £243 a month, DH can get £97 a month which pays for all our wrap around care for both children per month. The biggest loser there is me as it will obviously affect my pension later on, I've been taking childcare vouchers my entire career (16 years).
Prior to the 3 year old starting nursery in September our child minder provided the 15 hours and we topped up her salary so she wouldn't be short of the usual hourly rate.
So once your children are school age it will probably all be worth it and you can use vouchers and free hours to cover the majority of wrap around care.
I know everyone's circumstances are different but we find it very do-able. I only work 3 days a week so that probably helps a bit.

What do you want to do long term?

Childcare doesn’t get easier because once children start school you have holidays to take into account, and secondary school children still need to be near a responsible adult most of the time, but child care options are more limited.

Part time jobs are going to be hard to find at your salary level and might mean putting a long term break on promotion. Where do you see yourself in 10 years? Is it better to take the hit now in the expectation of a higher salary later or to permanently put the breaks on and perhaps change direction?

We've been in a similar position with DH's job. Ultimately we took the hit until his salary progressed over 130k and just saw it as part of the ebb and flow of earnings.

My longer term plan (ie after a couple of years) is to go solo and work for myself. I can't do that until my childcare bill goes down i.e. until after i start receiving the free hours as I wouldn't have the budget to pay for childcare while building up my self-employed work and income. Therefore I do very much see any current highly paid job as an end in itself for the short term and not a stepping stone for future even higher earnings in the same type of role.

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.

Average income: In 2015 the ONS calculated that the average annual income in the UK sat at £27,600. A person earning this much each year is overwhelmingly considered to be “neither rich nor poor” by the British public, at 72%.2 Jun 2017

www.theguardian.com/money/2017/apr/19/how-much-earn-rich-70000-labour
70,000 puts workers in the top 5 per cent of UK earners – why are we so reluctant to acknowledge this?

and you want to take money out of the system to help look after your children?

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.

How are you on that much money ,and 'struggling' ?

Do you have a DP/ H ?

You must have massive housing costs if you’re counting the pennies at that salary. We had a nanny and no other childcare. Combined salary of £140k and I worked 4 days a week. But we didn’t go for the big house we could have.

Maybe have a good long look at reducing your other outgoings.

Did I ever say we were struggling? I would say there's quite a big range between struggling and having disposable income. I absolutely acknowledge that people earning over 70k are in the top 5% or therabouts. I expect to join the 95% myself in a few years. However for now I have high childcare costs in order to work and I would like to receive some of the large taxes I pay back to support with that childcare. If you want to debate something debate that - should people pay tax on income used for childcare when it is a cost to work? This is a factor which makes many women give up work for good or end up working in low skilled roles even when they started off in high flying career. I'm lucky that I can manage the short term high childcare costs but many can't make the numbers work even as a short term measure and give up work altogether.

I can't believe that people are so bitchy.

The OP asked for advice, not a lifestyle critique.

We need to be celebrating women who succeed financially, not knocking them and trying to score points.

High earners pay more tax and so support the wider system. Maybe the OP should stop working and so stop paying in? At £100,000 she and her employer are paying over £50k into the system in tax and NI.

She is just as entitled to ask for advice as someone on NMW.

Just ignore the jealous comments OP and listen to the good advice from others in a similar position. I can’t understand people who click on a thread when it doesn’t apply to them. There is a dislike of people who pay copious amounts of money in tax to keep this island afloat.

Our mortgage costs are quite modest. Our biggest outgoing is the childcare expense, hence counting on the free hours kicking in. As I said my salary increased very recently - I've yet to feel the impact. Certainly my new salary will already give us some disposable income which I'm grateful for. However as I'm considering new roles that are more highly paid I do need to weigh up between the roles, therefore my original questions are still valid. I'm not going to work harder for no extra money, I already work very hard.

Yes I have a DP but I am the higher earner.

We need to be celebrating women who succeed financially, not knocking them and trying to score points.

Thanks for that. I work in a man's world and it is really hard to get taken seriously, especially once you are a working mother.

Bathroom I think the expectation is that people on high salaries have wives who deal with childcare. High earning women might share childcare equally with their partner, but very few have a partner who takes on most of the load.

We can’t all earn 6 figure salaries, but of those who do, I really want more of them to be women.

Wow people are extremely bitter at your situation op !

Actually op is making a valid point.

It's a big issue with GPs at the minute and a contributing factor in certain parts of the country to the current recruitment crisis (amongst a myriad of other things, of course).

You can work x amount for 100k.

Or you can work x+20% for.... about the same money, in some circumstances. Would anyone want to work harder to be not much better off?

So you get people thinking that they might as well stick at x amount, which is fair enough - until you realise that actually no one wants to extend hours or do additional shifts or posts as they will effectively be doing it for very little reward.

(Not saying that op is a gp of course, but just pointing out - who wants to work harder for less reward?)

You get similar problems at all tax/benefit thresholds. However I think this one in particular prevents parents who need childcare taking senior posts - and unfortunately this disproportionately affects women.