Childcare costs forcing you to give up work?

[Jo'sEnglish]

Ruth_Baldock Wrote:

>

> I know freelance and work from home around the

> children, which is bloody difficult actually, but

> needs must...

I've just started working freelance from home too. It's not the kind of work that I can do in odd snatched half hour or so so we had to look at other arrangements (that didn't involve me working all weekend, although I often find myself doing some work then). We looked at our one year old going to nursery for a couple of days a week but when we weighed up the costs (especially as I'm just starting so money is coming in erratically) it was a lot and when we sat down and thought about it and the fact that my husband would like to spend more time with the little one we made the decision for him to go down to working 4 days a week so I can have one solid day of working. Lucklily his work agreed (he's a contractor so that means more flexibility, although less stability!), and it's good because if he is really busy we can swap round the days he works, or he can work 5 days one week, 3 days another and we can fit around each other. I also have a student that I exchange English lessons for babysitting for so get a bit of extra time there.

Overall, I wonder why more people don't have father's that take over some of the childcare. Is it because their work is resitant to part-time working, because the dads don't want to or just that the money doesn't stack up this way?

We are definitely worse off financially at the moment but very happy with it as a lifestyle choice and I think it is good for both my husband and our baby boy to have regular, quality one-to-one time.

[reneet]

LondoMix: The reason people have someone else take care of their child(ren) is mainly because they have to go to work. One does not employ a gardner because they have to go to work therefore it is not the same. Childcare should be tax deductible, it does not make sense that it is not. Personally I do not pay tax for my childcare (I still pay alot of money for it), hence I can afford to have my child in a nursery 5 days a week. This is because my employer offers childcare as a benefit. Maybe more employers should do this. Although does not make much difference as childcare is still extremely costly.

Back to the tax deductible logic food and clothing, one does not py direct income and NI tax for like a nanny so do not count.

[LondonMix]

Reneet, I am glad your employer helps to partially cover your child care costs through a benefit in kind. The reason why I am even responding to this point about double taxation is because this often repeated yet erroneous argument might mislead honest people into making a serious mistake.

Perhaps this will help clarify things. Your employer agrees to pay you a gross salary of 36k a year and so you earn 3k a month but when you receive your pay check each month you get 2k. Do you agree that it is you rather than your employer that is paying 1k in taxes each month even though its is your employer that hands the tax payment over the HMRC? The same is true with a nanny. The taxes owed on nanny's wages are her / his tax bill not yours. It is the nanny who is separately being taxed, not the person who employs them.

This situation is the same for nursery fees as well once you analyse it. The nursery you contract with earns money from you for the service they provide and the nursery has to pay taxes on the revenue they earn. The only difference with a nanny is that HMRC expects the family to manage the PAYE / paperwork vs. the nursery who has to do it themselves. You freelancers out there should understand this very clearly. If nannies could be self-employed (legally) and file their own taxes, it would look just like nursery or a child minder to the families involved. More importantly, nannies would still charge families the same gross wage as they do now so they could maintain their take home pay.

I hope the example above makes it clear that everyone who provides you a service (whether or not you employ them directly or not) pays taxes on what they earn from you. A nanny is no different. There is no double taxation. It is the nanny who is paying taxes not the family.

Regarding the necessity argument: you never get to deduct something for tax purposes because it is a necessity to have it (whether you hire someone directly or not). Everyone acquires essential goods and services out of their take home pay and the people and shops they get these services from (like a clothing store or a seamstress) has to pay taxes on the income they earn. A nanny has to pay taxes too like everyone. All of life's essentials are acquired out of our take home pay and there is nothing inconsistent with the tax system in that regard as concerns nannies.

You've said that the importance of a nanny makes it different from other people one might hire (like a gardener). In that we agree but the point is that child care should get special treatment because of its importance rather than that there is some inherent double taxation mistake in the current tax system.

Again, I would like to reiterate that I very strongly believe the government should make child care more affordable because the current cost of it forces people to leave the work force who don't want to, that this disproportionately affects women and women's career prospects (making it a gender equality issue) and suppresses the birth rate (which with an ageing population raises serious demographic concerns for society as a whole).

[dulwichgirl2]

Londonmix, her employers do not pay her travel costs. I did not say this. I said that I was citing travel costs as the same type of example as your clothing example. Ie something needed to work but not deductible. Pls don't lecture me on basics like the taxation of benefits in kind when you are failing to pick up very clearly put points.

I am not sure if you have got the main point - the revenue and she have agreed that her childcare costs are deductible as she works on an emergency basis.

[dulwichgirl2]

By the way when interviewing nannies we have made clear to them that we are quoting a gross wage is their tax etc comes out of that. Obviously the amount we pay per hour is commensurately higher. The benefit to us is that we dot get involved in their invariably messy previous tax position not do we take the risk of tax increases or their having other income that is weirdly taxed. Nannies are one of the few occupations where this strange net referencing still goes on and it is in the employer's interest to quote gross and get them on the same footing as most other providers Of services.

[LondonMix]

Sorry, I didn't get that and wasn't trying to lecture you. That is interesting. Btw- my most recnt post wasn't to you.

[Saffron]

Thanks everyone for making some great points, and especially LondonMix for explaining the seeming paradox of double-tax for nannies. Maybe you said somewhere and I missed it, but why don't nannies file their own taxes independtly the same as others? (Or maybe some nannies do quote net and file their own taxes?) Are they legally barred from doing so? Isn't an independent nanny who is not working for an angency considered to be self-employed, eg files own tax? Pardon my ignorance, it's not an area in which I have a great deal of experience. I know there has been controversy over the issue in the past. Just wondering where it stands now?