What the £100,000 childcare cliff edge means
Updated 7 September 2026For Tax-Free Childcare and Free Childcare for Working Parents in England, each parent’s expected adjusted net income must be £100,000 or less for the current tax year to pass the upper-income test. Other eligibility conditions also apply. England’s universal 15 hours for 3- and 4-year-olds are separate and remain available regardless of parental income.
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 qualifying pension contributions or other reliefs can bring you to £100,000 or less if you are close.
How the £100,000 childcare limit works
Tax-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 bring ANI to £100,000 or less
- Qualifying gross pension contributions: £3,000 gross takes £103,000 back to exactly £100,000, which passes this upper-income test
- 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. If you want to compare your family’s net income with other households, use the household median calculator; that is a different question from childcare eligibility.
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?
Each parent’s expected adjusted net income must be £100,000 or less to pass the upper-income test for Tax-Free Childcare and England’s Free Childcare for Working Parents. Other eligibility conditions apply. The universal 15 hours for 3- and 4-year-olds in England are not subject to this income limit.
Is the £100,000 childcare limit per parent or per household?
The upper-income test is per parent. If either parent’s expected adjusted net income exceeds £100,000, Tax-Free Childcare and England’s working-parent entitlement can be affected. The universal 15 hours for 3- and 4-year-olds in England remain available.
Does the childcare limit taper gradually?
There is no gradual taper in this upper-income test: expected adjusted net income above £100,000 fails it. For England’s working-parent hours, existing places may continue for a grace period after eligibility is lost. The universal 15 hours for 3- and 4-year-olds are unaffected by income.
Do I lose the 30 hours free childcare if I earn over £100,000?
You can lose eligibility for England’s 30-hour working-parent entitlement if either parent’s expected adjusted net income exceeds £100,000. For 3- and 4-year-olds, the universal 15 hours remain available regardless of income; the 30-hour entitlement includes those 15 hours. Existing working-parent places may continue for a grace period.
Can pension contributions bring me within the £100,000 childcare limit?
Qualifying pension contributions can reduce adjusted net income to £100,000 or less, which passes this upper-income test. Other eligibility conditions still apply.
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 |
| Universal 15 hours in England | Income-independent entitlement for 3- and 4-year-olds. | View source |
| Free Childcare for Working Parents | England’s working-parent entitlement and upper-income test. | 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.