Financial advice for a proud full time mum!

bylromarha

Have recently given up paid employment to take on full time unpaid employment looking after my gorgeous 4 month old baby.

However, the whole financial landscape seems to have changed as I enter the world of family tax credits, child benefit, no pension etc etc etc

So far I have claimed child benefit and thats about it...my teachers pension want me to pay a ridiculous amount each month if I want to maintain that, although when I return in 5+ years I'll be able to restart where I left off. Should I get another pension in the meantime?

And the tax gets confusing as hubby is self employed.

HHHHHHHHHHHHEEEEEEEEEEEELLLLLLLLLLLLLPPPPPPPPPPP :'(

Basically I would greatly appreciate any advice on if and what I should claim now, and how, and anything else moneywise which would be of benefit.

dunstonh

So far I have claimed child benefit and thats about it

Dont forget tax credits.

my teachers pension want me to pay a ridiculous amount each month if I want to maintain that, although when I return in 5+ years I'll be able to restart where I left off. Should I get another pension in the meantime?

The teachers pension is one of the best around. Anything else you take out in its place will be way below that. Are you on maternity leave or have you resigned? or is there some scheme with teachers employment that gives you 5 years off?

And the tax gets confusing as hubby is self employed

Confusing maybe but at least his tax should be lower than if he was employed.

MarkyMarkD

Agree with DD that the teachers' pension scheme is very good. If you are allowed to maintain membership during your period off work, then you will definitely not get better value by investing in an alternative pension - although the actual cost may be less.

Tim_L

Meanwhile, get all of your family investments and savings into your name - as a non earner and therefore non-taxpayer you can register not to have tax deducted using an R85 form for each account. This is worth an extra 20% at least (depending on your husband's income).

Robert_Sterling_3

Meanwhile, get   the optimum amount of your family investments and savings into your name.

bylromarha

Are you on maternity leave or have you resigned? or is there some scheme with teachers employment that gives you 5 years off?

I wish! No, I've resigned, but as I know I'll be going back into teaching when my son is about 5, I looked into keeping up the pension. I was shocked at the figures they quoted...they were soooooo high!

As for the advice about transferring accounts into my name, I'm still recieving SMP...does this affect the payments or should I wait until it stops?

byl

Milarky

I wish! No, I've resigned, but as I know I'll be going back into teaching when my son is about 5, I looked into keeping up the pension.  I was shocked at the figures they quoted...they were soooooo high!

If you make pension contributions [and this goes for your husband, equally] then these are eligible deductions against your assessed joint-income for the tax credits as well as income tax. So, in effect, pension contributions may be doubly privileged. It isn't automatic however, as you need to be able to qualify for WTC/CTC.

With a child under one [if I have my facts straight] you get a 'protected' element of £1090 [£545 + £545] for joint income ex decductions upto £50,000.

In addition you get a reducible allowance of £3645 [£1525 + £1500 + £620] WTC plus £1445 for each child. Thus your WTC/CTC starts at £5090. This is reduced by 37% for anything you earn above the relatively low threshold of £5060 in that year. So by the time your joint income rises above £18,800 you are left only with the protected element until it exceeds £50000 - and then it goes down at £1 in £15. so tax credits will finally be exhausted at joint income of £66350.

The point is, though, that pension contributions reduce the assessment of joint income £ for £. So if your husband earns £20000, let's say he would get tax relief at 22% on the first £1200 of pension contribution BUT your tax credit would then start to be made up again by 37% of anything either he or you contributed in excess of £1200. 37% plus 22% equals 59% [effective] tax relief.

But the important issue is that this is an indirect relief - and it depends largely on 'where you are' in income terms in relation to the 'cut offs' identified by your family circumstances [ideally earning below £18800, or not too far above it]. Have a second child [I'm not suggesting that you should!] and the top of the 'cut off' moves up again....

[Sorry for the long-windedness, but this wasn't my idea, it was Gordon Brown's ::) ]

As for the advice about transferring accounts into my name, I'm still recieving SMP...does this affect the payments or should I wait until it stops?

byl

If you earned more than the single person's tax allowance - £4785 - in the current tax year up to date [and your SMP may be taxable and add to your earnings anyway, but I don't really know] then putting savings into your name now will only start to benefit you from the start of the next tax year in April 2005. However if your husband is a higher rate taxpayer and if you were not/are not then you should have the family savings in your name now anyway.

nh

Could you use your husband's current pension contribution to carry on with your teacher's pension? ie. if he pays in £200 a month now, could he reduce that to £50 and pay the other £150 into your teacher's pension. If he has a private pension I am sure the £150 would be better spent in the teacher's pension.

Just an idea, and that depends of course on whether you think you will still be together when you retire - not nice to think about but there are divorce implications... :-/