implications of hubby earning £45k, it it worth me going back to work?

Hells84

don't want to cause any arguments but was wondering if anyone could give any advice


hubby recently got a pay rise and now earns £45k gross (very lucky). I work three days and earn £20k gross (£14k net), both in the city so we commute. we have a 19 month old son and are due our second bub in June. luckily my work will continue to pay for childcare vouchers whilst I am on maternity leave so that's all good. our childcare for our son is £650 - £700 a month, and we have been offered a sibling discount of 20% for our next baby when/if it goes into childcare.


my question is this.


are we better off me not working after the end of my maternity leave and just getting something locally? will hubby get taxed to smithereens now that he is earning over £40k? we got married in June, so would that give us both some tax relief or just him or just me? we haven't notified HMRC that we are now married or anything, do we need to do that? just assumed that as work know, that they would deal with it (naïve I know)


childcare with two kids will be around £1100 a month so if you were in my shoes, would you go back to work in the city or go for a local job with an extensive pay cut?


Thanks in advance xx

Darksparkle

Does your partner pay into a pension or have any salary sacrifice?

These would reduce his taxable income.

Whether you can apply for marriage allowance will depend on the answer to this as it is only available to basic rate tax payers. Higher rate tax doesn't start until after £42,385.

So on £0 to £10,600 he pays no tax
£10,601 to £42,385 he pays 20%
£42,386 to £45,000 he pays 40%

Whether to go back to your job or not would really depend on the facts eg what other expenses you incur working travel etc

Would childcare be the same either way?

Do a calculation of your income in both scenarios and see what one is better off?

Savvy_Sue

This wouldn't just be about the money, to me.

If you don't go back to work, how much will you miss your current job?

If you don't go back to this job, will you ever be able to get back into this field? And if not, how much do you care?

Hells84

good question!!! the only reason I like my job at the moment is because its a break from the childcare as well as giving my brain a work out! would I miss it....? not entirely. I am lucky enough to receive a bonus every year (have worked for the company for 9 years) so I would miss that. I have worked my way up as it were, and don't have the necessary qualifications needed, if I were to apply for my own job now, if that makes sense? I don't mind not going back into the same field of work though... but at the same time, my employer has been kind enough to adapt to my childcare needs and part time requests. I don't think I will get a part time job like this anywhere else!!


x

MoneyMission2015

If your childcare is going to be that much, you're working just to pay childcare. However, it depends on how much you enjoy your job and what you will do when both children are older and childcare costs have reduced.


For me, I am glad I returned to work, because although nursery fees were high for the first few years, childcare costs have reduced a lot now that it's just a few hours after school with the childminder and in the meantime my salary has increased 7 years that I've been back since having our second child so we're better off financially. I am lucky that I enjoy my job though and my employers are very flexible in regards to my hours and any time off that I need so it's a win/win for me.


If you change jobs to somewhere local, you'd still have the same childcare costs presumably, but would be earning less money so I don't see this option as being a viable one really, especially if you're earning less money and also losing the possibility of an annual bonus.

Darksparkle

Darksparkle wrote: »

Does your partner pay into a pension or have any salary sacrifice?

These would reduce his taxable income.

Whether you can apply for marriage allowance will depend on the answer to this as it is only available to basic rate tax payers. Higher rate tax doesn't start until after £42,385.

So on £0 to £10,600 he pays no tax
£10,601 to £42,385 he pays 20%
£42,386 to £45,000 he pays 40%

Whether to go back to your job or not would really depend on the facts eg what other expenses you incur working travel etc

Would childcare be the same either way?

Do a calculation of your income in both scenarios and see what one is better off?

Just to add to this.

A done couple of calculations.

So on £20,000 with childcare vouchers your net pay each month is £1225.

Childcare is £1100 les £243 childcare vouchers so you'd be left with £368 per month after childcare.

How much are your costs to commute?

Also keep in mind that children of 3 and 4 get 15hrs free childcare per week. There are plans to increase this to 30hrs free childcare from Sept 2017.

McKneff

You might check if you have to repay any maternity pay if you don't return to work.

Savvy_Sue

MoneyMission2015 wrote: »

If your childcare is going to be that much, you're working just to pay childcare.

I have never really understood this way of looking at things, ie that childcare costs are compared to the lower earner's salary / the part-timer's salary, rather than looked as an expense of BOTH earners.

MoneyMission2015 wrote: »

However, it depends on how much you enjoy your job and what you will do when both children are older and childcare costs have reduced.

And this is another point to look at long-term.

In the short term, the family budget may not be much increased by the OP working, but longer term the financial benefits should increase.

And it's about more than money!

kazzah

i gave up paid work when I had my children - I had them close together in order to get back to work quickly ( a financial necessity I thought)

but the second baby had a disability and I knew that my job (retail) would NOT give me all the time off I needed for hospital appointments etc.

So we cut back drastically - stopped the foreign holidays downgraded the car etc and took the financial hit.

for ME ( not for anyone else ) this was the BEST decision I have ever made, I loved my time at home with my children - I was able to attend ALL their plays, sports days, teacher evenings everything- I KNEW my children inside and out - I was the first person to hear them speak, see them walk, nurse them when they were poorly.
I have NEVER regretted it -ever - we had holidays in the UK old fashioned family caravan holidays and they loved them.

I was fortunate enough to be able to volunteer for the Charity of my sons disability - starting small with writing a local newsletter- getting more involved as the children started school etc.
I now work full time ( as a volunteer) for the charity and have met some fabulous people and travelled to some great places to attend symposia and training events.

I am lucky that I hadn't ever earned "big" money whilst working- so consequently didn't miss it as much and it was a bit of a struggle financially as hubby didn't earn a huge amount.

But for me the rewards were more than compensation - but this isn't for everyone, I do understand that.

Playing_with_Fire_2

Savvy_Sue wrote: »

I have never really understood this way of looking at things, ie that childcare costs are compared to the lower earner's salary / the part-timer's salary, rather than looked as an expense of BOTH earners.

I think this way of looking at it makes sense if the only choice is between one parent or carer staying home with kids and not paying for childcare or both going to paid work while paying for childcare. Not that any one person should have to actually pay for the childcare out of one set of wages.

eamon

Post 2 figures are not correct these are current numbers

Income Tax rates

Tax rate Taxable income above your Personal Allowance Basic rate 20% £0 to £31,785
People with the standard Personal Allowance start paying this rate on income over £10,600
Higher rate 40% £31,786 to £150,000
People with the standard Personal Allowance start paying this rate on income over £42,385
Additional rate 45% Over £150,000
as per this example

Example You have £35,000 of taxable income and you get the standard Personal Allowance of £10,600. You pay basic rate tax at 20% on £24,400 (£35,000 minus £10,600).

To the OP you need to do careful sums in order to uncover your breakeven point. I'm sure there is a tax calculator in this site somewhere and don't forget to factor in your NI contributions.