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How much do I have to earn to break even...

12 replies

staranise · 12/05/2010 18:23

...after I've paid for a full time nanny?

A nanny where I live would cost £80-100 a day net. About £750 gross a week? In which case, can it be true that I would have to earn over £50,000 just to break even?!

Am I going wrong somewhere in my tax calculations (used online nanny tax calculators but not sure how they are worked out)? And does anyone know what difference childcare vouchers would make?

I'm contemplating a return to full-time work but with three children (one pre-school), I think a nanny would be the only option but I'm struggling to see hwo the sums would work. Many thanks for any help you can give.

OP posts:
thisisyesterday · 12/05/2010 18:35

would a childminder or before/after school clubs be cheaper bearing in mind you only have one pre-schooler?

GypsyMoth · 12/05/2010 18:42

think i might go back to working as a nanny!!

staranise · 12/05/2010 18:43

My other two are in reception (starting September) and Y2 so I'm a bit reluctant to have them in clubs for long periods (plus DC2 will be part-time til after October half-term) plus I don't think their school has them.

The only childminder I've looked at, who will also do school pick-ups, would cost £110 a day - does that include tax?

OP posts:
brennannbooth · 12/05/2010 19:59

CM is cheaper because the £110 a day is gross, CMs are self-employed and pay their own tax and NI. I think your calculations are right, you have to earn about £51k p.a. to afford a nanny at the £110 / day net rate because of tax and NI and to be honest it is probably more than that as you'll have to provide food, nappies and a kitty for activities too.

thisisyesterday · 12/05/2010 20:02

could you work part-time and then go full time once the youngest is in school?

or how about a nannyshare of some sort?

badgerhead · 13/05/2010 08:22

Remember though that once dc2 is in school full time the cost of a childminder will go down to about £81 per day looking at core hours of 8 to 6 with 4 hours of b/a school care for two children & all day for one dc at £4.50 per hour, & then be higher only in the holidays as it will be all day care for three children. However you might find that a childminder might do a discount for a family who also come in the holidays full time, or at any rate offer to spread the cost over the year rather than paying out a really high amount in the holidays against term time. Otherwise you could use holiday clubs for part/all of the time which generally work out cheaper.

staranise · 13/05/2010 11:59

Thanks for your replies. TBH, I'm going rapidly off the idea of full-time work. I work freelance from home at the moment and hate it - dull, stressful, no colleagues, poorly paid etc - but and it's a big but, it is super-flexible for the children.

I jsut find it so frustrating that I'm well-educated, lots of experience, willing to work but can't find a way that's viable with three children - especially given that I'm sure they would hate me working full-time and DH isn't keen either.

OP posts:
ktwiltshire · 13/05/2010 19:44

You would be better off with a childminder, that way you can get a registered one with an ofsted number and you can claim the childcare back on tax credits, which makes a HUGE difference in terms of finances. without tax credits i could afford to work, far beyond that, as i have two kids i pay the nursery way more than i earn myself!

MrsCMAW · 14/05/2010 08:29

Have you considered the option of changing what you do but continuing to work from home? It sounds like that might be a good solution? When I was struggling with the idea of going back to work after DS I decided to take a risk and start my own Usborne business and it's worked out very well for me - it fits around looking after DS and although I'm working for myself at home there is a community of Organisers who are there for support and advice and general chit-chat so I don't feel like I'm all on my own!

If you'd like to know any more drop me an email to [email protected] or have a look at my website

Hope it works out, whatever you decide!

Anotherbaby · 01/06/2010 10:27

I am hoping to go back to work after having my 3rd child.I work 3 days a week in a job I really enjoy. No1 will start reception in Sept, and No.2 will start getting government grant in Sept. However recently while starting to look seriously into it, I am coming to the conclusion that it may not work. Will keep looking into it and hopefully will sort something out.

FlexibleAccountant · 02/06/2010 14:23

If you want to pay a Nanny £100 per day net then this will be £100 5 52 = £26,000 net.

Using this calculator to check you'd need to pay the nanny £35,000 gross, Nanny would pay tax of £5,705 and NI of £3,220 which would leave them with £26,000 net.

On top of the £35,000 you would pay employers NI which would be £3,748 = total wages bill of £38,748.

Using the same calculator to check if you earned £55,000 you'd pay tax of £11,930 and NI of £6,308 to leave you with take home of £38,760 to pay the nanny!

You'd need to do the payroll yourself or pay a payroll agency and you'd have to pay out extra to cover sickness and holidays.

Perhaps if you post on the Childminders/Nannies topic you can confirm whether the costs you gave for a Nanny salary are accurate.

As to how childcare vouchers work - first your Nanny would have to be Ofstead registered - I understand that most aren't so you'd have to help him/her to apply.

Then both yourself and your DH could request that your employer pays part of your salary as childcare vouchers. The maximum amount each parent can claim is £243/month so £2,916 per year. Assuming you and your DH are 40% tax payers you'd be saving tax at 40% and NI at 1% so you'd be better off by 2£2,916 41% = £2,391. (The vouchers are disregarded for calculating your tax and NI - so you can playabout with the tax calculator).

I also work freelance and can sympathise with the issues you mention.

Maybe come over to the Freelancer's topic and see if anyone can inspire you to increase your motivation/income.

FaithAndNoahsMummy · 11/06/2010 17:48

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Best of all, no childcare fees to worry about! You can work it around them, and my youngest comes with me when I do it. I really enjoy it as well and has boosted my confidence and self esteem no end!

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xx

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