Childcare costs forcing you to give up work?

[emc]

Hi there

I know there's lots of threads on this so apologies for posting yet another.

A report is due to be published on Monday which will find, unsuprisingly, that spiralling nursery costs are adding to the financial woes of parents and in many cases they are considering, once nursery fees have been paid, whether if it's worth them working at all.

I would love to speak to you if you are the position of debating whether it's worth carrying on working or perhaps you have recently given up work for this very reason.

This would be for a very short, pre recorded interview for ITV Daybreak. It would take about an hour and I can pay a small fee for your time.

Pls PM for more info.

Thanks v much!

[Fiona S]

Hi there,

Very interesting topic and a issue that is truly close to my heart, which is why I had to stop working full-time after having my second child last year June and have now built an online business supporting new mums and mums to be in various areas of parenting. I have recently started an on-line Webinar show that covers a varity of topics, that I feel would be very fitting for your interview please send me more information. I look forward to hearing from you

Warm Regards

Fiona Small

[Saffron]

Only found out for certain at the beginning of summer that I would be returning to work fulltime in Sept. Yes, we probably should have had Little Saff down on some nursery waiting lists from last year, but not knowing what/when my work situation would be, it seemed like a lot of money to be plunking down application fees left, right, and centre (some places want ?50 just for filing your paperwork!) for a nursery place we might/might not need. Added to the fact that we've been talking on/off for a year about moving house. And, even offered a place previously, we would not have been able to afford a nursery place unless I was working anyway. So we didn't apply for any waiting lists last year.

A scramble for childcare this summer has demonstrated that most of our local (SE4-ish) nurseries were (a) full, (b) could not offer the days/times needed, © did not have a suitable enviroment (eg, too small). I found a certified Montessori nursery 5 min from my work near Waterloo station. The nursery has its own kitchen for hot lunches, and a private outdoor space. Plus, nursery staff take children on days out to local parks and activities. They've quoted ?815 monthly fees for 3 full days (9-5) per week. I thought this seemed just a bit on the expensive side of average, London and the SE in general being notoriously high for childcare costs. But, I thought given the quality of care and location near my work, it seemed about par for the course really. DH, however, is holding his head in agony. He thought childcare would be a "a few hundred per month". As a new postdoc, I'm not going to being making heaps of money, but I feel like if I don't act now to get back into work then I've lost a major opportunity to make a future place for myself in my field.

Nevermind being forced "to give up work", I feel like childcare costs are a massive impediment to even starting work!

Soooooo, I can go back to work provided I can come up with nursery fees, but I can only pay the fees once I go back to work. Anyone else see the problem here? (Your solutions in 50 words or less by Monday evening please. ;-) )

[Norfolkvillas]

Saffron, don't forget that most childcare voucher schemes allow you to stockpile vouchers for future use, so if your husband can start collecting them now, he should do, and then you can when you start work. We find it makes a big difference, both actually and also I think psychologically - a chunk of money coming out at source somehow feels less painful than having to find it as cash at the end of each month, and with both of us in schemes, that's almost ?500 of our monthly costs covered. Sorry OP for slightly off topic, but related, post...

[kittysailing]

It's a minefield and one that takes so much thought, money and energy. I went back to work for eighteen months in between babies (leaving eldest witb lovely childminder) and wasn't sure how the nursery thing would pan out where/when etc so ended up putting him down on 5 different lists locally - I thought this was overkill at the time but the ?150 quid I've lost actually bought me options and for me options equal peace of mind. He's now at the Villa which he loves and happens to be nearest to me although he had to start 6 months earlier than I wanted him to otherwise he may have lost his place ( my plan was that baby brother would neatly take his childminder place ) so now in order to keep the childminder place I'm having to pay a retainer there too. I agonised over the situation. It we love the childminder so much ( like part of family ) and I couldn't bear the thought of finding someone else. Both the nursey and childminder are 5 mins away and I've secured the days I need at both when I go back to work in January. I suppose what I'm trying to say is the only way to look at early years childcare is as a loss leader. You are holding your ground in your career and if you enjoy your work it's not too painful. I tied myself in knots a bit to make sure I will have what I consider to be the best possible for my toddler and will be 1 year old next year. I saved up childcare vouchers when I was at work and it certainly feels easier to pay the retainer with those now I'm on maternity leave. Also I'll be better off when the early years money kicks in at nursery in Jan. defiantely worth checking a private nursey works with the government on that one. Im rambling ( it's therapeutic ) - all I can advise is think about all your possible work scearios and cover all bases to give yourself options, then put your fingers in your ears, close your eyes and go blah blah blah until they are at school and you can financially breath again( interestly all the nurseries I put his name down for when he was three months came good at around 2 ( villa, gumboots, Camberwell early years, new one ammot rd and Sainsburys car park one).

[Saffron]

Hmm, didn't know childcare vouchers could be stockpiled. Husband is self-employed and only has been for a few years, so we're still on the learning curve there I fear!

Emc, not meaning to sidetrack the thread off topic, just hoping to get a bit more dialogue about childcare & finance issues in general. How did your interview piece go?

When I start work next month, my salary will be the larger income in our family compared to Hubbie, although we both have good career potential. However, it may be Hubbie who is looking to reduce hours at work. I heard that this is becoming more common, for the wife to be the breadwinner and the husband to do more childcare. Anyone else in similar situations?

Kittysailing, I totally get what you're saying about just sucking up the losses for childcare in the early years. Even before I started looking for childcare, I sort of assumed it would take at least half my salary up front. So I felt fairly prepared when I started looking at actual nursery fees. DH however seems to think a ton of bricks has fallen on us.

But who wouldn't want to pay a little more to get good quality early years care? Hey, some people are even giving up their jobs to stay at home with their children... so I hear!

[Sayroo]

... I had a question and googled the answer to stop this going off on a tangent!

However, picking up on the point re men reducing working hours and getting more involved in childcare - I think it's a matter of time / generation change that we will see more of in future. Don't know much of the practicalities of it now and in my line of work (HR) have only seen requests for part time work coming from men close to retirement who want to work 3 days per week for a couple of years before finishing... But a number of friends have spoken of the pros of both parents working 4 day weeks. Have seen that working better where fathers have been self employed, but I would expect the trend to change as dual careers become more of a reality.

Sorry - this seems a bit of a tangent now too...!!!

[dulwichgirl2]

We should lobby for childcare to become a fully deductible business expense* but with the current parlous UK finances i don't hold out much hope.

* ie the total cost as opposed to how childc are vouchers work.

[ClareC]

Totally agree!

Why a business taking on an employee is tax deductible (as are that employees expenses), whereas an individual hiring a nanny does so out of their net pay and then has their tax and NI to pay on top! Why are individuals treated less favourably than company's?

Other forms of childcare are no better, you can't work without having childcare in place so why on earth can that cost not be tax deductible? So many more people would be able to afford to work if thayptvwere the case.

[KatsuQueen]

dg2 and clareC, I agree! - but have a horrible suspicion that even if that ever happened, nanny and nursery costs would just go up. It's just what the market will bear and there is a tipping point where mothers will say, well that makes it just about worth it for me to go back to work. And nannies' rates will always be at that tipping point. (Not explaining myself really well)

What I mean is, say currently 30% (totally made up number) of mothers earn enough to pay for childcare. If full tax breaks were introduced, then still only 30% of women would earn enough because nannies' wages / nursery charges would just go up.

[ClareC]

An alternative result could be that initially more people can work, lack of places drives up cost but this in turn encourages more entry to the market which brings down cost....

Maybe the solution is a Gov run system like in Sweden. A full time nursery place there costs @ ?300 pm!

It is phenomonally expensive to get good Childcare in ED, we have a 15mth age gap between our two and it was genuinely cheaper to hire a nanny than have two lots of nursery fees.

We moved away earlier this year and the cost of Childcare is significantly cheaper where we now live. Our nanny has recently chosen to leave, very sad to see her go but having now made alternative arrangements a nanny is genuinely an expensive option here even with two children of a young age.

[Shaggy]

Child care costs did not prevent me fom returning to work but definitely preventing me from having a second child.

[Strawbs]

I have one child at the moment and it still makes financial sense for me to return to work but if I'm lucky enough to have another that may be a different story. I am thinking I may retrain as a childminder to facilitate me being able to work from home at some point..

[LondonMix]

I get what you are saying about supply and demand but the tax breaks would make it affordable for more people I think. Creating any kind of tax credit would drive up demand (as more people could afford it) and consequently prices (as you allude to) but the price increase would also encourage more people to enter the market (attenuating price) until a new equilibrium was reached regarding supply and demand. In the end, I agree, there wouldn't be much in the way of true savings for those who already can (barely) afford these services but there would be an expansion of the service enabling more women to go back to work if that makes sense so it would not be totally pointless. Not sure if the point I'm trying to make is clear.

KatsuQueen Wrote:

-------------------------------------------------------

> dg2 and clareC, I agree! - but have a horrible

> suspicion that even if that ever happened, nanny

> and nursery costs would just go up. It's just what

> the market will bear and there is a tipping point

> where mothers will say, well that makes it just

> about worth it for me to go back to work. And

> nannies' rates will always be at that tipping

> point. (Not explaining myself really well)

>

> What I mean is, say currently 30% (totally made up

> number) of mothers earn enough to pay for

> childcare. If full tax breaks were introduced,

> then still only 30% of women would earn enough

> because nannies' wages / nursery charges would

> just go up.

[reneet]

I have spaced out my children such that only one will need fulltime childcare at any one time. This is not by choice but necessity, childcare is too expensive and I have been arguing for ages with people that it should be tax deductible. It does not make sense to pay tax for a nanny, NI maybe but income tax is ridiculous, it means double taxation which is against the tax principle hence employees are tax deductible. I even asked once if I could start a dummy campany and employ myself and my nanny as employees of the company and get my company contract me to the organisation I am working for so that the nanny becomes tax deductible. I pay ?1100 a month for fulltime nursery for one child. Ill have to pay some money for my daughter to be picked up from school when she starts, My husband and I have opted to tug team on this so one goes late and leaves late and another goes very early and leaves early to pick her up.

Shaggy Wrote:

-------------------------------------------------------

> Child care costs did not prevent me fom returning

> to work but definitely preventing me from having a

> second child.

[LondonMix]

I think the government should do something to help but the way nannies are paid are the way everyone is paid who provides you a service-- you just notice it with nannies because you are in charge of filing the taxes. I'm not saying working families don't need help but that often repeated argument isn't exactly right. For example, if you have a gardener, you pay them a gross wage and they pay their taxes. For a nanny, you pay a gross wage but are responsible for handing over the taxes to HMRC. Even if the gardener has a company and pays themselves a wage (which is common) they still have to pay taxes both on the wage they receive and any profit the company makes.

Anyhow, the gov't isn't likely to do anything as long as everyone keeps on having kids! The birth rate in the UK is still relatively high and most countries in Europe introduced subsidised child care to bolster declining birth rates.

[amydown]

I think the point is that as employers, parents are paying for all the associated costs of hiring a nanny out of NET pay, therefore not getting any tax deductions. It's not anything to do with how nannies get paid but the absurdity of the fact that we cannot get any tax deductions as employers. As parents employing a nanny, we are required to do, by law, pretty much everything that a company has to do in hiring someone (e.g., PI insurance, maternity pay, sick leave, NI liability, even providing a payslip) but we get no tax benefit for any elements. Seems very inconsistent, given that companies can treat all costs associated with hiring someone as tax deductible expenses.

In effect, the government is ignoring the fact that working mums are not only contributing to the economy by returning to work but also providing another source of employment for others, helping generate greater economic activity, whether that's through hiring a nanny or paying for a nursery place.

It's absolutely bonkers when you work out the financial cost of going back to work. Nanny costs are getting pushed up in part because of lack of adequate nursery provisions (as evidenced by the ridiculous waiting lists in ED). State incentives to encourage more nursery provisions would also make other forms of childcare less expensive.

Big big sigh.

LondonMix Wrote:

-------------------------------------------------------

> I think the government should do something to help

> but the way nannies are paid are the way everyone

> is paid who provides you a service-- you just

> notice it with nannies because you are in charge

> of filing the taxes. I'm not saying working

> families don't need help but that often repeated

> argument isn't exactly right. For example, if you

> have a gardener, you pay them a gross wage and

> they pay their taxes. For a nanny, you pay a gross

> wage but are responsible for handing over the

> taxes to HMRC. Even if the gardener has a company

> and pays themselves a wage (which is common) they

> still have to pay taxes both on the wage they

> receive and any profit the company makes.

>

> Anyhow, the gov't isn't likely to do anything as

> long as everyone keeps on having kids! The birth

> rate in the UK is still relatively high and most

> countries in Europe introduced subsidised child

> care to bolster declining birth rates.

[LondonMix]

I agree with the sentiment and don't want to hijack this thread with a non-point. I agree that nursery places should be subsidised so that more open at lower costs so that more women / men who want to work but can't afford to can get back to work.

However, your logic of people being treated like companies doesn't work in my opinion. We all contract many people and services just like a company as part of daily life. If someone directly employed a gardener (rather than hiring a gardening company) would you still think deducting this expense from income tax made sense? By your logic, all costs people incur for running their lives theoretically could be deducted from their income tax bill if they employed people directly. Child care is a special service only in that its in society's interest to keep the population going and to keep people in work. Therefore, child care costs deserves special treatment rather than there being any inherent double taxation at work.

Personally, I think most people would prefer to pay higher taxes and have nursery subsidised. It will work out as the same cost over the long run for many people but avoiding it as one lump while you children are little won't force people out of work. Politically speaking, nanny's being subsidised / tax deductible is probably too controversial as most people still associate nanny's with the very rich though in London the reality can be far different.

[dulwichgirl2]

In your first post, I think you meant "wouldn't be totally pointless", londonmix?

[LondonMix]

Yes, thanks-- I'll edit

[dulwichgirl2]

The difference is that childcare is an absolutely necessary expense of working cf a gardener.

Otoh, you may say that the train fare is a necessary and undeducible expense for the employed person. (note though that it is deductible for the selfemployed.)

A friend of mine does supply teaching often a a moments notice. She somehow gets occasional credit for her chdcare costs but I think this is a tacit acknowledgement of the fact that if she can not work there will be a class of 30 nutcases causing havoc or indeed 30 other parents taking time off!

Pls ignore lack of apostrophes and commas. iPhone is too hard work and wwants to insert its own!

[LondonMix]

I'm not sure I understand all your points but any benefits in kind your friend receives (such as a travel card) are taxable even if she is not declaring these benefits in kind to HMRC.

I get that child care is a necessity for most working people and that the high cost of it disproportionately affects women and women's career prospects. For these reasons in addition to the general benefit for society (more workers / higher birth rates) I think it's morally imperative that child care costs should get SPECIAL treatment by the gov't . My only very limited point is that its not inherently double taxation to pay someone to provide a service out of your take home pay (whether its nursery fees or employing a nanny directly or employing a gardener or buying work clothes or buying food etc) as is so often asserted. The cost being essential has nothing to do with why it deserves special treatment-- work clothes are essential as is food and shelter-- but rather the broader societal impact child care costs have.

[dulwichgirl2]

Londonmix, capito and agreed re clothing. I was citing travel costs in the same way.

My point re my friend is that she has come to this agreement with the revenue, hence why it is of interest to post. (by the way, she wldnt be my friend if she were non declaring benefits in kind - that is fraud, put plainly.) the have allowed her to claim these emergency ch costs because of the whole nature of her work being very last minute and therefore some costs are deductible which would not be so for other people.

Wretched phone!

[Ruth_Baldock]

When I went back to work, the ONLY way I could afford to was because my in laws extremely kindly offered to look after my son two days a week. When I became pregnant, I knew it would be way too much to expect my MIL to look after a (what would eventually be...) a 9mo old and 2y4mo old. My son was 17mo old when I went on maternity leave, and had a 3 hour nap in the day, and it was extremely tough on my MIL. No way would it have been workable with both of them (feisty baby and toddler won't/can't nap). So that was that. Bye bye work. Good job I was made redundant just before I left to have the baby, eh?

I know freelance and work from home around the children, which is bloody difficult actually, but needs must...

[LondonMix]

DG--That her employers are covering her travel costs does not make the travel costs tax deductible. Covering the costs is a form of compensation from her employer that gets taxed like income. Its just like your company giving you private health insurance or a subsidised gym membership so I am not sure I understand what you are trying to get at here (genuinely).

Ruth Baldock-- that's awful. There are rules about terminating pregnant women. Did you speak to a lawyer?

dulwichgirl2 Wrote:

-------------------------------------------------------

> Londonmix, capito and agreed re clothing. I was

> citing travel costs in the same way.

>

> My point re my friend is that she has come to this

> agreement with the revenue, hence why it is of

> interest to post. (by the way, she wldnt be my

> friend if she were non declaring benefits in kind

> - that is fraud, put plainly.) the have allowed

> her to claim these emergency ch costs because of

> the whole nature of her work being very last

> minute and therefore some costs are deductible

> which would not be so for other people.

>

> Wretched phone!