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True Take-Home

The £100,000 childcare cliff, calculated

Most tax thresholds taper. This one does not. If your adjusted net income reaches £100,000, you lose Tax-Free Childcare and the funded hours for working parents outright, and both are tested per parent with no household averaging. For two children that is up to £4,000.00 a year of Tax-Free Childcare gone, on top of the funded hours, for one extra pound of income. It is the sharpest edge in the UK tax system and it sits inside the same window as the 60% personal allowance taper, which is why so many people meet both at once. Figures checked 2026-08-29 against gov.uk, on the 2026/27 rates.

Calculator

Childcare cliff calculator

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0%, or £0 a year

Both childcare schemes test adjusted net income, not salary. Salary sacrifice reduces it, which is why it is the lever here. Bonuses, dividends and savings interest push it up. Work yours out with the adjusted net income calculator.

Adjusted net income £105,000

Over the cliff

You are £5,000 above the £100,000 limit, so you lose Tax-Free Childcare worth up to £2,000.00 a year for one child, and the funded hours entitlement as well.

Getting back under

Sacrificing another £5,000.00 into your pension takes your adjusted net income to £100,000 and restores both entitlements. Your take-home falls by £1,900.00, and the money is still yours, it is in your pension.

So you give up £1,900.00 of spendable pay to recover £2,000.00 of childcare support plus the funded hours. On the Tax-Free Childcare figure alone that is worth doing.

Why this is worse than the 60% trap

Between £100,000 and £125,140 the personal allowance is withdrawn gradually, which produces the 60% marginal rate. Childcare does not taper. One pound of adjusted net income over £100,000 removes both entitlements completely. For a parent of one child, that single pound can cost £2,000.00 in Tax-Free Childcare alone.

It is also tested per parent, and there is no household averaging: two parents on £99,000 each keep everything, while one parent on £101,000 and one on nothing loses it.

Tax-Free Childcare cap £2,000 per child a year (£4,000 for a disabled child), from gov.uk, checked 2026-08-28. Funded-hours eligibility from gov.uk, checked 2026-08-29. The cash value of the funded hours is not shown because it depends on your local authority's funded hourly rate, and no single national figure would be true.

Why a cliff is worse than a taper

Between £100,000 and £125,140 the personal allowance is withdrawn at £1 for every £2, so the pain arrives gradually and the marginal rate settles at 60% before National Insurance. Childcare works differently. There is no taper and no partial entitlement: at £100,000 you qualify, at £100,001 you do not. Someone earning £100,000 takes home £68,557.40, and the person earning one pound more takes home almost exactly the same while losing thousands in childcare support.

What counts towards the £100,000

Adjusted net income, not salary. That means a bonus counts, dividends count, savings interest counts, and rental profit counts. It also means the two things that reduce it are pension contributions and Gift Aid donations. This is why salary sacrifice is the standard answer: it lowers the figure both childcare tests actually look at. The adjusted net income calculator works out your real figure, and the salary sacrifice calculator shows what a contribution costs your take-home.

The per-parent trap

Each parent is tested separately, and there is no averaging across the household. Two parents earning £99,000 each, £198,000 between them, keep everything. One parent earning £101,000 with a partner earning nothing loses it. That is not a drafting accident, it is how the rule is written, and it catches single-earner households hardest.

What this tool does not price

The funded hours are worth real money, often more than Tax-Free Childcare, but their cash value depends on the hourly rate your local authority is funded at. There is no single national figure that would be true for everyone, so this calculator shows the entitlement as lost rather than inventing a number for it. The Tax-Free Childcare figure it does show is the published cap of £2,000 per child a year, or £4,000 for a disabled child.

This cliff is tested on each parent separately, so where income sits between two earners matters as much as how much there is. The household income calculator combines two salaries and shows which rules look at the household total and which look at one person.

2026/27 rates, checked 28 August 2026 by Hadi. Childcare rules from gov.uk. Method on the about page.

How to use the childcare cliff calculator

  1. 1

    Enter your adjusted net income and your partner's.

  2. 2

    Enter your children's ages and your childcare hours.

  3. 3

    Read what one pound over £100,000 costs you in free hours and Tax-Free Childcare.

  4. 4

    See the pension contribution that keeps you under the threshold.

When should you use the childcare cliff calculator?

Use it if you have young children and your income is approaching £100,000, because the support stops entirely rather than tapering.

You are approaching £100,000 with young children

This is a cliff, not a taper. One pound over and the support stops entirely.

A rise would cross the line

The rise can leave you thousands of pounds worse off overall.

Weighing up a pension contribution

A contribution that brings you under the line pays for itself many times over.

Both parents work

Either parent over £100,000 ends eligibility, regardless of the other's income.

Where to go next

All 51 calculators share one tested engine, so a figure from the childcare cliff calculator agrees with every other page here. See the full calculator index or the pay and tax guides.