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.

Yes, of course you do. You can’t post anything on mumsnet related to money without getting told how lucky you are etc. Also the idea all contractors are fiddling taxes and immoral which is also nothing to do with the thread is nonsense.

I think they're two completely different things. I am well aware I earn a good salary, and am grateful for it. I am equally aware of the huge amounts of unstable, poorly paid work about at the moment. It bothers me, and influences how I vote and how I spend my money.

However the OP, despite her good salary, is in a position where she may be taking on extra hours and responsibilities for little extra net pay. I don't think anyone would be overly keen on that despite their earnings.

OP, I'd look at:

80/90% of FT

Pension salary sacrifice (your taxable salary may already be lower than you think if you have a pension matching scheme)

Taking parental leave - all parents are entitled to 18 weeks unpaid over a child's first 18 years of life

Purchasing extra holiday if your company offers

Obviously if none of them suited and worked for you, I'm sure you'd cope - especially if this new job is a step on the way to higher earnings.

I also still don't see what it has to do with the decision.

Neither is the situation of people in lower paid jobs, but you keep referring to them.

Clearly the 30 hours childcare isn't supposed to be a low income benefit or it wouldn't be given to people earning £99,999.

You seem to think that people on high incomes shouldn't receive state support. You aren't alone. Plenty of people on the right believe in a low tax, low benefit state. Why provide good quality state education and healthcare when you can lower taxes and enable the higher paid to sort out their own private healthcare and education? Maybe even their own gated communities?

However, high quality state provision and benefits depend on everyone feeling that they benefit from the system.

Meanwhile, you have no idea of the OP's situation, and outgoings, so it's impossible to make judgmental comparisons to your own or other's lives.

The reason the support cuts out at £100,000 is pragmatic. Childcare costs money and the government is already underpaying providers. However, the OP's post is also just asking a practical question.

Some really good points merrymouse. I've never felt bad about paying the high taxes, which I have done for many years, but to voluntarily put myself in a situation where I'm not getting any extra money in return for more work/stress/unpredictability is a bit senseless.

Part-time will probably be full time workload on part time pay but purchasing extra holiday is a really good idea!

I find the breakdown given by DistantVworp above pretty accurate - the £5.5k monthly take home on just under £100k is swallowed by £2k rent (average for family home in this bit of SE), £1.5k childcare (wrap around to enable the long and unpredictable hours that go with high-wage jobs), £1k commute, and then &1k all other bills. If the family earned this with two £48k earners rather than one £96k earner they would be in the same position but without the tax issues.

The “cliff face” that you fall off at £100k-£124k is an oddity of the current tax bracket system that does genuinely seem to mean that (because of loss of childcare provision, loss of personal allowance) you are in fact worse off until you hit £124k+

Most people who plan seem to stick with the £99k job for this very reason, and stagnate at a job they have outgrown. many hope that they will eventually be senior enough to leap-frog that bracket (but not always possible i know), or transition through that bracket when they haven’t got young-child commitments. It does seem like an own-goal by the government. If there was just a standard progression to a next tax bracket without these penalties, many more would try to achieve these next-level positions and more tax would be received accordingly. Instead, anyone with a family who can tax-plan looks at the disincentives and says “Actually, it’s probably best if i stop here. Thanks anyway.”

Yes, there shouldn't be a cliff edge. I would rather pay 60% tax on all amounts above 100k than be worse off or no better off between 100-124.

Yes it is the annoying part - I'm currently doing a 4/4.5 day week but there is no reduction in workload. Still, it does mean I can be more flexible about when I can do the work which is very helpful when there are children to collect

You seem to think that people on high incomes shouldn't receive state support

I've said no such thing, you are projecting.

Meanwhile, you have no idea of the OP's situation, and outgoings, so it's impossible to make judgmental comparisons to your own or other's lives

Oh come on. Seriously - anybody struggling on 100k a year needs to get a grip on money management. Its bloody insulting to the vast majority struggling along on average earnings.

The OP started off by saying she had no disposable income, then changed that to a definition of "no disposable" which excluded savings and other costs. No disposable income means nothing beyond bare essentials - it means no income to put into savings.

The point I made up thread, is that the situation described (ie career points where you work more for less benefit) are the norm and nothing to do with sex or the existence of children.

There are many issues women face in the workplace which men don't but anomalies around top rates of tax are not one of them. Every major career step has a period of time where you work more for less to get the next rung on the ladder. This is not only true for high paid careers - talk to anyone in public sector or service jobs and they will tell of the time they spent doing the level above's job for free before getting that promotion.

The choice is really simple - do you want the promotion more than you want family life at this time? If yes then go for it, if not then defer it. Any of us in this type of path have to make those decisions - male or female.

You can’t post anything on mumsnet related to money without getting told how lucky you are etc

Well if you want to talk about life being tough and having no disposable income on 100K then you can expect to be challenged because its nonsense.

And since I'm well above that you can safely assume I'm not suffering from envy. What I do have a realistic view of what it takes to get to that level and the fact that it isn't just a smooth upward trajectory for anyone. Every career path has ups and downs and some of the downs are working more for less when you want promotion.

Why on earth do people rush on to these threads just to make nasty comments? Why shouldn’t the op be able to ask this question?
What exactly do you think you are contributing?

Congrats on managing not to put “when I was...” or “in my day....” on this post @C8H10N4O2

Maybe you should just leave it as the OP is evidently taking things on board but not engaging in pretty squabbles of the type you’re trying to spark.

If you read the whole thread you would have seen that I quoted my full time salary (for comparison and because I've just gone back to full time) but have been working less than full-time therefore have not actually been on that salary. I didn't complain about not having "disposable income" but said I looked forward to having it again. You may differ in your interpretation of what disposable income is but all I'm saying is I look forward to having extra income that I am comfortable to use now rather than put away as a basic safety net for the future. I do look forward to that

Seriously - anybody struggling on 100k a year needs to get a grip on money management.

You can get through £100k after tax pretty quickly if for instance you are supporting a family member with a disability or illness.

Any of us in this type of path have to make those decisions - male or female.

This particularly affects people with young children without a partner who is a SAHP, so disproportionately women who are already under represented at senior levels in all industries.

What exactly do you think you are contributing?

The points I've made several times which are not apparently wanted are:

• the issue of taking effective time/pay cut for senior promotions is normal for all people, male, female, parent or not
• anomalies in the tax system between boundaries have always been there

It is not specifically a parenting or women's issue and complaining that it is simply misses the possible solutions which are personal choices around timing of career jumps and addressing the anomolies.

You can get through £100k after tax pretty quickly if for instance you are supporting a family member with a disability or illness

And again, how do people living on normal money manage? You are still vastly better off than most even if you choose to spend your entire disposable income on life improving kit/support - its still a choice using disposable income.

But keep running up with the examples of how life is so tough on 100k. I'm struggling to think of one which isn't much worse for lower incomes and still faced by them. I'm also struggling to see the relevance of such examples to the specific question about working more for less to get promotion.

This particularly affects people with young children without a partner who is a SAHP, so disproportionately women who are already under represented at senior levels in all industries

Well except senior women have the disposable income to pay for the higher quality childcare. They are also more likely than average to have higher earning ex partners contributing.

If you are earning that much you should NOT get any help from the government. That's for the poor people.
Here have a

The poor people where both partners earn 99k?

My point is that the government is happy for people in families with a parent earning up to 100k (taxable income) to receive support with childcare costs. Therefore clearly the government does not consider this to be for poor people only. Nor are many state benefits, as referred to previously - NHS, state schools, libraries etc.

@C8H10N4O2 I thought that initially you made some good points but you do increasingly just sound bitter.

Realistically most of us lucky enough to have income in this bracket have, at some point, had to manage on much less. When I earned less, my expectations were less, in terms of where I lived, what I did with my leisure time, what was a ‘luxury’. The fact that we have managed on less - as other have - doesn’t mean that the rationale for how a monthly income of 5-6k can be easily spent on ‘essentials’ is wasteful or invalid. If I earned less, I would live differently. As I have done in the past. Asking for advice on how to spend earnings in the wisest way possible from peers is, from my perspective, a perfectly legitimate action.

It’s a shit tax band

At income levels do between 100 and 125 I would pay into my pension to get back just below 100 taxable income, watching the annual and life time limits.

We can also buy 10 days of holiday which is a good way of swapping taxed cash for time and getting below 100 if you’re in the marginal zone.

but you do increasingly just sound bitter.

Bitter? About what exactly? I've been there and I know how hard it can be. But I do find it offensive for people on very high incomes, in one of the lowest taxed countries for high earners in Europe to talk about "struggling" and not having enough disposable income.

My points were simple - tax anomalies and having to do the next job up for free for a while are not new and not women's issues specifically. Making them so is a distraction from the actual issues, especially when senior women are so much more likely than lower paid women to have extensive workplace support.

I have people working for me who defer these promotions or move to jobs with better work/life balance at this stage in life (the men just as much as the women). Usually they come back further down the line.
That is the decision we all have to make and its nothing to do with hardship on the money we are paying them - its about personal choices.

That is what people need to address, anything else is aiming for the wrong target.

It’s not for one minute an equal division of men and women doing this.
It’s perfectly fine to argue the point without continuously trying to shoehorn in what a high flyer you are too. Thereby dismissing everyone else’s experience.

It’s not for one minute an equal division of men and women doing this.

Is this aimed at me? Because I have more men moving role for family reasons than women.

It’s perfectly fine to argue the point without continuously trying to shoehorn in what a high flyer you are too. Thereby dismissing everyone else’s experience.

If that's aimed at me I've no idea what your point is. I know what it takes to get promotion across a range of jobs - both high and low paid. I've had to make those decisions too.

I could simply say that unicorns are real and everything should be roses but that isn't the reality of the workplace right now which is what people should focus on. The reality is also that higher paid senior men and women have far more choices and support than their lower paid peers Again - focus on the reality of the situation and make choices based on that.

Yes it is aimed at you. I don’t know what sector you claim to be a major employer in but in mine, it’s absolutely not true.

We’re in the same boat although my dh annoyingly got a payrise that threw us into this bracket.
I know you’ll always get people saying oh but you earn enough but it actually costs money to stay in a job at this level!! Not to mention just because you have say 10k payrise it really doesn’t mean much in terms of monthly salary when tax comes out and we’ve just seen our mortgage go up with interest rates and lost all access to any kind of help.

We have put a minimal amount into pension and dh still had childcare vouchers as was already on a scheme and didn’t get that taken away but wouldn’t get it if he started a fresh application. Our nanny was ofsted registered so took childcare vouchers.
He claimed absolutely everything he can back now from his company whereas before he’d just lazily submit expenses so that’s help reduce costs rather than help with income. I would also vouch for hiring a financial advisor. We’ve always said leasing a car through work just means you end up with a tax bill later on paying benefit in kind.

Dh now looking to move jobs and will not take a salary like £110k because it’s going to equate to hardly anything. In our field that’s a reasonable reason to push for the next bracket up based on these tax implications . Perhaps see if this role will push you into the next bracket soon enough that you will be able to consider that more sensible salaries such as £120k when you’re being reimbursed suitably instead of just handing your small extra salary to the tax man.
Also if you can get part tome to equate to less than the cut off and then when suitably qualified/whatever you can always push back up to over the limit once you’re past baby childcare. School age childcare much easier and cheaper anyway imo.

Pisses me off when people say £100k wealthy. We don’t feel wealthy after childcare costs blah blah. We live in a very modest home.
There’s a lot of friends I have who’s working tax credits etc massively push their income up and they appear to fail to realise that the reason you earn £100k+ is because you work not simply watch the top ups come in and also all the non cash benefits you’re still entitled to.
HTH