Tax-Free Childcare can be lost if either partner’s expected adjusted net income goes above £100,000 for the relevant period. Unlike Child Benefit, this is not a gradual taper on this income test, which is why families often experience it as a cliff edge.
Adjusted Net Income (ANI) is the HMRC figure behind these threshold checks
Adjusted Net Income (ANI) starts with your taxable income, then takes off certain reliefs such as qualifying pension contributions and Gift Aid. It is the figure HMRC uses for rules such as the High Income Child Benefit Charge, Tax-Free Childcare and the £100,000 Personal Allowance taper.
Worked examples
These examples focus on the situations families most often search for: safely under the line, just over it, and back under it after a pension adjustment.
You £96,000, partner £40,000
Income test can still be passed. On the income condition alone, both parents are under £100,000.
Why it matters: this rule is not about household income in the round.
You £101,500, partner £35,000
The income test can fail. If one parent’s expected ANI goes above £100,000, the household can fail this part of the Tax-Free Childcare test.
Why it matters: one parent crossing the line is enough.
You £104,000 with a £5,000 gross pension
ANI can come back under the line. A qualifying gross pension contribution can reduce expected ANI below £100,000 and change the answer.
Why it matters: the cliff edge makes even a modest ANI change important.
High salary but uncertain bonus
Expected ANI is the key number. Where income is variable, the practical question is often what ANI you reasonably expect for the period, not the most optimistic or worst-case guess.
Why it matters: this page is designed as a threshold check, not a full childcare-account audit.
Why this feels like a cliff edge
This page matters because the childcare rule feels very different from the Child Benefit taper. A small ANI difference can flip the answer completely.
This is a per-parent £100,000 ANI test
The rule is not based on combined household income. If either partner’s expected ANI is over £100,000, the household can fail this part of the Tax-Free Childcare test even if the other partner earns much less.
Check the expected ANI figure, not just contracted salary
Because this is a cliff-edge test, expected bonuses, benefits and reliefs can matter a lot. The closer you are to the line, the more important it is to use ANI rather than a rough pay estimate.
What can push you over
- Expected bonuses
- Taxable benefits
- Other taxable income not included in salary
What can pull you back under
- Qualifying gross pension contributions
- Checking the correct ANI method
- Separating one parent’s ANI from household income
What to check before assuming you are over
These are the points that usually stop families from making the wrong call too early.
Using household income as the test
The rule here is a per-parent £100,000 ANI limit. A lower-earning partner does not cancel out one parent being above the line.
Ignoring reliefs when the gap is small
If you are only slightly above £100,000, a pension contribution can make the difference between failing and passing the income test.
Check ANI and compare the family rules side by side
Many users benefit from checking the ANI calculator and the combined childcare-versus-Child-Benefit page next, especially where the same income changes affect more than one rule.
Continue reading
Move to the next threshold page that usually matters once childcare is in the picture.
Questions people usually ask
Is the £100,000 childcare limit per parent or per household?
It is tested per parent on expected adjusted net income, not as one combined household-income threshold.
Does the rule taper gradually like Child Benefit?
No. This income test is better thought of as a cliff edge rather than a gradual taper.
Can pension contributions help?
Yes. Qualifying gross pension contributions can reduce ANI and may bring a parent back below the £100,000 line.
| Primary source | How PayPrecise uses it | Link |
|---|---|---|
| Tax-Free Childcare eligibility | Current per-parent income test and scheme rules. | View source |
| Adjusted net income guidance | ANI method used for the threshold check. | View source |
| Income Tax rates and Personal Allowance | Connected £100k pages use the same ANI line for related decisions. | View source |
This page is designed to give you a quick, transparent estimate. It is not personal tax advice, and it does not replace checking your exact HMRC position.