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.

Honestly I can understand why people feel upset about this kind of post when their circumstances are very different, I do empathise with that and this is a bad time for people on low incomes.

At the same time this is a real issue for me. Also, in some small way I am pushing boundaries for women and mothers within my working world. Perhaps if there were more women earning over 100k the childcare support rules would be different.

I will speak to a financial adviser at the right time but for now I thought Mumsnet was a good shout and indeed many people have been able to offer good advice.

OP, my husband earns over £100k when taking his bonus into account. We therefore lost our entitlement to 30 hours free childcare. We saw it as a temporary problem as our DD has now just started school so only needs wraparound care now.
From a careers perspective I think you should definitely try to get as much money as possible in your next job move but not get too bogged down about the right bracket. Look at the bigger picture - if you’re already talking about the 30 hours won’t your DC be starting school next year? So childcare costs should be going down anyway..

Its a killer bracket. It depends on whether you are topping out or this is a stepping stone...if you're topping out forget it unless it's a particularly fulfilling role.

OP I do get your point. The tax system does make that piece of income not worthwhile. Whether you are earning more than most or not.

I would revisit your childcare arrangements. A live in nanny may be more cost effective.

Are you entitled to the 30 hours at your salary bracket? I thought that was for families that needed it ?

Why not just go for whatever job you like the look of most, and negotiate your salary down to 110k if it pays over that? I'm sure the employer won't complain!

If you want to debate something debate that - should people pay tax on income used for childcare when it is a cost to work?

Hear hear. OP is CONTRIBUTING to the state through the shit loads of tax she has to pay when you're in that salary bracket. Those of you who are bitter about a successful woman asking for advice need to take a cold shower!

Is it is too late to join childcare voucher schemes?.Although the tax savings are minimal, about £2k a year if you both join. Also the 15 hours is not means tested as far I know (or is wasn’t when my kids were at nursery)

I think we spent around £100k in total in childcare in the years before my kids went to school. But to be honest I saw working through the preschool years as a future investment and am now reaping the rewards

Can your husband get more family friendly hours?

“I thought that was for families that needed it ?”

Lot’s of tax spend goes to people who arguably don’t ‘need’ it - libraries, NHS, schools.

The point is that if everyone benefits from the state according to their situation, people are happier to pay taxes.

I get so frustrated that people like the OP get such a roasting for asking for advice and guidance on an issue, clearly bothering them, merely because they’re a high earner.

As the PP said, we should be supporting a female smashing the glass ceiling (that does still exist) and congratulating her on the opportunity to be able to apply for a £130k role, not condemning her for earning too much or more than yourself.

Bathroomwoes - I can’t help with the tax advice as I’m still in the 40% bracket. However, car wise, I would recommend looking at hybrid cars - really low Co2. You would need to do a thorough check of tax implications if you have a company car (as opposed to car allowance and sorting your own car out). I find the parkers website is good for working out exactly how much a car would cost for all models. Hybrids are coming in very low, when Co2 is at only 50.
Seriously, well done for being able to start moving into this wage bracket - what an amazing career achievement!

I think the childcare voucher scheme closes this October. Also you have to sign up again at each employer. So no use after changing jobs.

And to the poster saying My DH and I have a combined annual salary of over £100k.

That’s very different from the OP. We are on that but we get both 15 hours funded and 30 hour tax free. (We get more than on vouchers because of high childcare cost). We also still get some child tax benefit.

I’m assuming the OP has a higher combined income than her own salary. But well done on having such a successful career.

Sign up for the childcare voucher scheme now before it closes as that is not means tested. Also like others have said you do still get 15 hours free regardless of income.

Ah sorry too late- it closed to new entrants on 4th October

Also a higher earner don’t get £2k for both on childcare vouchers. You get a lot less even at the 40% bracket. Assuming you can still join. The only people on the higher tax bracket and have the near £1k benefit joined around 2011. So no need to look at that at all.

@jilldoyoulikeowls

30 hrs is for working parents earning over £16,000 and under £100,000.
remember though it is actually only 15 hours extra as the other 15 every child in the country in entitled too it.

Children living in a home with an income of under £16,000 are entitled to 15 hours the term after turning 2.

This thread makes me despair, when a successful person works hard, pays an almighty tax rate and is then told she is taking from the public purse for might I add only 12 months for something she is entitled to I just don't get it. I think I would be correct in saying the OP will be working and paying tax for a hell of a lot longer than a year.

If I went for a new job I’d definitely want over £100k, currently I’m under. This would put me in the childcare costs crack and cost me more but i figure it’s worth it for the long term, just like any woman going back to work looking at childcare costs. You just have to weigh up pros and cons and see what a financial advisor would come up with.

Goodness what a lot of bitterness on this thread. Instead of jumping on the figure consider that the op is paying tax and supporting her family. She loses child benefit, all free hours and her tax free allowance. That kind of job also requires flexobility and therefore more expensive childcare. Op it is a tricky tax bracket as you lose as much as someone earnin g £500k. Is salary likely to continue to go up?

If we want equality and a more diverse work force we should be supporting women like the op? Or do you want your dds to think high paying jobs are just for men?

@MichonnesBBF I totally agree. DH and I see almost half of our salaries disappear in taxes every month.

We have never looked into childcare schemes - not because we love to pay more - but because we always presumed that the household income was too high.

This is interesting, we have used the standard 15 hours with all DC and never applied for anything else.

I meant £2k if you both get them ie £1k each. But it’s a moot point seeing as the childcare voucher scheme is now apparently closed

Clearly no one is going to have sympathy with high earners and childcare but there are some really stupid disincentives that kick in above the 100k theshold. You are are effectively taxed at 60% plus you lose the tax free childcare and extra 15 hours. We’ve looked into this and (at the moment) the most effective thing to do is pension. It is possible to plan for that over the year but if you get any bonuses on top, they’d have to go straight into pension. People in the 100k plus bracket are effectively paying a higher marginal tax rate on each pound earnt than people earning far higher amounts which distorts behaviour.

The 15 hours still provides a sizeable discount and we kept childcare vouchers last year as we wanted to keep my husband’s bonus (although once it was taxed, there wasn’t a lot left). This year we’re looking carefully at tax free childcare to see whether we can make it work.

I know how lucky we are but also know that it could disappear at any time. When the tax system is designed poorly, people try and get round it (legally). You see this at the child benefit threshold as well. The OP shouldn’t be attacked for asking for advice. The more women earning high salaries the better. It was obvious what the question was going to be from the title.

Sorry for the slight hijack but I'm guessing there are people on this thread who might know.

The new tax-free childcare scheme is open to anyone in the €16k- £100k bracket. Does that only take base salary into account or do things like shares, bonus, pension, car allowance etc, which have pushed me into the higher threshold, mean I also won't be eligible for this scheme?

Oh, and congrats OP. I very much admire the classy way you've handled some quite bitchy, unkind comments this evening. Good luck with whatever you decide :)

Yes bonus and any taxable benefit will mean you can’t participate in the scheme. Very unfair in my view and counter productive.

When is childcare going to be tax deductible? Any government serious about women working should implement this. After all, a chauffeur is tax deductible.....

lrh3891 The HMRC guidance is about as clear as mud but the calculator uses this definition.

This is the total pay from all your jobs, or profit from self‑employment, with any pension and gift aid contributions taken off.