Taxed out of the UK – it is not only “low income” families who cannot make ends meet in the UK – Why I am in Dubai
In the Autumn of 2013 I checked myself into A&E at the Royal Berkshire Hospital because I had reached the end of my endurance. I had just enough reason left to get there rather than ploughing my car into a barrier on the M4. I was exhausted and had been suffering with severe depression for several months. I could not pay my bills, despite working all the hours possible and not having had a break from either childcare and housework or my engineering job since my daughter was born in the spring. But no matter how hard we tried we were still building debt at a rate of £1000 a month with no power to change the situation.
When we bought our flat, we could afford it. When we started our family, we were both employed and could just about afford it. When my husband’s self-employed job in the movies ended he started his own building company, which did well to begin with. But we were unlucky, and thanks to the current tax and benefit system in the UK we found ourselves at once liable for full tax bills, on a vastly reduced income, and eligible for no financial assistance. The NHS treatments for the resulting anxiety and depression for both of us treated the symptoms but were powerless against the cause.
We didn’t blow our money on beer and bingo, nor did we take out a mortgage we couldn’t at the time afford. We simply dared to have children on my stable income as a chemical engineer (with a first class master’s degree and seven years service with my employer) plus a less reliable income an experienced but self-employed, honest, tax-paying tradesman.
By that time last Autumn we had reached a debt of £30,000 from zero, in the 2.5 years since our son was born. Not including the money we still owed to the HMRC who were sending us letters threatening jail for my husband because we could not pay his £1500 tax bill from the tax year which began before our son was born in 2011, plus their £1000 estimated future tax bill.
I had tried everything, tax credits, independent financial advice, debt consolidation loan quotations, changed utility suppliers and sold possessions on eBay and at car-boot sales.
We had 2 children under 3 in the cheapest available childcare, 4 days a week. In West Berkshire that is about £1700 a month right there. Because our expected annual gross income was above a certain figure, we could not claim anything except child benefit, which was at least a help (I would have lost this had I worked 5 days a week, meaning that our net income would be exactly the same whether I worked 4 days or 5). Equally, because I had previously been very good with money, we were already paying the least possible amount in interest and charges, so moving our debt around would also have made no difference. We did manage to save a little by baking our own bread and collecting firewood from the nearby woods (I’m not kidding).
Here is the bare and honest mathematics which caused this black hole for our little family: my gross monthly income was £3700, minus childcare vouchers and company pension contribution, that left £3320. My husband’s average monthly income for the year had been lower than normal as it was year three for his new company and there were many costs such as new subcontractors, new equipment and so forth required so that his take home pay had decreased significantly. But this should be temporary…the current figure at that time was around £800 per month (gross, since this is below the threshold for paying income tax). So our total gross income was in the region of £4120 per month, on average (that is about £50,000) per year, which sounds like a lot, and is why we could not get any financial help.
My salary was, of course, subject to PAYE deductions, these were £530 income tax, £300 national insurance and £180 student loan. Add £185 per month council tax for the 3 bedroom flat in a converted listed building in the West Berkshire countryside which we bought cheap as a repossession with no water or power to begin with. Then there was the £1010 mortgage for said flat (I had requested payment holidays and filled in some forms, but Barclays stated that having children is an insufficient life-change for them to consider payment holidays, they still owe me for a separate PPI claim they are ignoring). The flat also came with a £1000 annual maintenance charge, so that’s £83 per month.
This all adds up as follows:
- Total gross household monthly income = £4,120 plus child benefit of £135 = £4,255
- Taxes, NIC and Student Loan = £530 + £300 + £180 + £185 = £1,195
- Mortgage and maintenance charge = £1,010 + £83 = £1,093
- Childcare, 4 days a week, minus childcare vouchers = £1,700 – £243 = £1,457
Therefore our income after taxes, mortgage and childcare = £510 per month.
This needed to cover road tax, car insurance and maintenance (there is no public transport within 2 miles of our home), electricity, internet, mobile phones, and food for one grown man doing a physical and usually outdoor job, a nursing mother, a toddler, a baby and two cats. as well as cover the running of one old banger since neither my office nor the children’s nursery can be reached by public transport in under two hours. It also needed to cover and credit card minimum payments (for debt amassed during 6 months of maternity leave for my son in 2011 and 3 months maternity leave for my daughter in 2013 as my multi national engineering company only provides the statutory minimum maternity pay). We also paid for a TV license, minimal broadband/TV/phone package and pet insurance for our two cats.
Just for food, petrol and power, we could never have got by on that, especially in those months when the car broke down or the hot water heater had to be replaced, or the bathroom plumbing leaked and collapsed the ceiling of the flat downstairs, or the Victorian drinking water system for the estate needed revamping. If my husband had given up his company to stay at home and look after the children we would have been better off, but still not enough to survive on my income alone, let alone pay anyone back.
So by the autumn of 2013 this had been going on for a while, and I had seen it coming from the moment I realised that I was pregnant with my daughter, but still, I had been unable to prevent it. We were getting by on substantial loans from family and friends, with no realistic way to pay them back in the future – at least until the children were both old enough for school…it seemed that there was just no way out on that dark day last autumn.
Once I was back home from my stay in hospital I realised that with £15,000 debt to banks, more than that figure owed to friends and family, more than £4000 debt to the student loan company still, a £185,000 mortgage and £2500 outstanding to pay the HMRC, something had to change dramatically. Slogging away, pinching the pennies and trying our best, clearly was not enough. But checking out was not going to provide a better life for my children. I realised that we faced two choices:
Option 1 was to sell the flat and try to rent something smaller which might just make enough difference to mean that we could halt our slide into further debt. If you work in Berkshire, this would be very hard to find. Our chances of being able to reduce our debts in such a situation would be slight, and it would take many more years of slogging to the bone, being too exhausted to give our children, or each other, the love and attention they deserve, but at least we would be surviving (but with high risk of repeat and prolonged stays on the psychiatric ward).
Fortunately for us all, thanks to my engineering job in a major international contracting firm, we had a second option which was sometimes available. We could leave The UK System far behind. Or at least I could.
Option 2 involved hoping for a position overseas to come up and persuading my company and that particular client that I should be sent for the job. Hopefully that would also be somewhere not too dangerous, and if possible, not too far for my husband to visit me and our tiny children. Very luckily for us, such a position came up and my immediate managers supported my bid to go. So now we have a new life, we can pay our bills each month (in both the UK and Dubai), I work long hours (48 per week), but with the help of a live-in maid the laundry gets done, we eat well, we pay no tax, and I spend some quality time with my children every single day. This comes at the price of the children only seeing Daddy for one weekend each month, and no longer seeing the rest of our family and friends, except via Facebook and Skype.
But I can sleep at night, knowing that by the end of this 2014/15 tax year, I should be able to pay back everyone who has lent us so much money since our son was born. We just have to stay away until my son can start school and my overseas earnings will definitely be tax free. By my engineering estimate we have another 12 to 15 months remaining in fiscal-exile.