What the £100,000 childcare cliff edge means
If you use Tax-Free Childcare or the funded 15 or 30 hours, one income line decides everything: £100,000 of adjusted net income, tested against each parent on their own. Go a single pound over and the support can stop — there is no gradual taper here, which is why people call it the childcare cliff edge.
This page helps you check where you and your partner stand against the £100,000 limit for 2026/27 using adjusted net income rather than your headline salary, and shows how a pension contribution or other relief can pull you back under the line if you are close.
How the £100,000 childcare limit works
Updated 7 June 2026Tax-Free Childcare has a blunt income rule: each parent is checked separately against expected adjusted net income. If one parent goes over £100,000, the whole claim can be affected.
The number is not always the same as salary. Bonuses, taxable benefits, pension contributions and Gift Aid can all move the adjusted net income figure, so it is worth checking before making a decision.
And because there is no taper here, the gap between £99,500 and £100,500 of ANI can be the difference between keeping the support and losing it entirely.
Tax-Free Childcare can be lost if either partner’s expected adjusted net income is over £100,000 for the current tax year. Unlike Child Benefit, this is not a gradual taper on this income test, which is why families often experience it as a cliff edge.
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.
Note: 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.
The catch: 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 precision pays: 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.
Scope: this is a threshold check, not a full childcare-account audit.
Why this feels like a cliff edge
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: an £85,000 salary plus a 20% bonus is about £102,000
- Taxable benefits: a company car can add several thousand to ANI
- Other taxable income not included in salary: £3,000 of dividends still counts
What can pull you back under
- Qualifying gross pension contributions: £3,000 gross takes £103,000 back to £100,000
- Checking the correct ANI method: use the gross figure, not the net amount paid
- Separating one parent’s ANI from household income: £70,000 each passes, even though the household is £140,000
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
What is the £100,000 childcare limit?
To keep Tax-Free Childcare and the funded hours, each parent’s adjusted net income must stay under £100,000. Going over can stop the support.
Is the £100,000 childcare limit per parent or per household?
It is per parent. If either parent’s adjusted net income is over £100,000, the childcare support can be lost, even if the household total looks modest.
Does the childcare limit taper gradually?
No. Unlike the Child Benefit charge there is no taper — being just over £100,000 has the same effect as being well over, which is why it feels like a cliff edge.
Do I lose the 30 hours free childcare if I earn over £100,000?
You can. The funded 15 or 30 hours use the same £100,000 adjusted net income test as Tax-Free Childcare.
Can pension contributions keep me under the £100,000 childcare limit?
Yes. A qualifying pension contribution reduces adjusted net income, which can keep a parent below the £100,000 line.
Is the childcare limit based on salary?
No, it is based on adjusted net income, so bonuses and other taxable income count, and reliefs such as pension contributions reduce it.
| 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 |
| High Income Child Benefit Charge | Child Benefit taper references and related threshold context. | 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.