30 hours and tax free childcare but potentially could earn over 100k by the end of the year

@JimmyN16 how much over 100k do you earn? The answer depends on other factors as well eg if you will then exceed your Annual Allowance limit for pension. You might get the 30 hours funding but have a tax bill somewhere else that doesn't make it worthwhile. Remember everyone gets 15 hours anyway regardless of income.

Call the tax free childcare service. I asked them about this and they said you only need to state you’ve gone over at the next reconfirmation when you’re certain that the salary will exceed 100k. You don’t need to pay anything back for the period up until the reconfirmation.

As others have said, pay some extra into pension or make a charitable donation to get back under 100k. The rules are dreadful for penalising working parents covering childcare expenses in order to work.

Hey so can someone clarify this for me. My daughter starts nursery this April 2024. I plan on paying the nursery fees in full through from then until September 2025 when the 30 hours kick in.

I earn over 100K per year. My plan was to start salary sacrificing anything over that amount into my pension from April 2025 (new tax year). Hoping by September 2025, there will be 5 months of PAYE that is below the threshold and i'll be able to apply for the 30 hours.

Would this work?

Keep an eye on your earnings to date and if you are reaching the threshold for cut off oft the free hours then increase the pension contributions or any other pretax benefits. (At my employment we can purchase an extra week of leave which is deducted pre-tax)
This way you can maintain your free hrs.

Depends if he went over last year. If he did then no, you’ll need to wait until the new tax year and provide a self assessment (if needed) or they’ll then have access to your p60 to see that you went under.

If you stayed under last year you should be
fine to apply now.

We are hoping to take advantage of these schemes from April. My partner's adjusted net salary is currently over £100k but he can do pension salary sacrifice to take it under.

So if we got a payslip with the new contributions in January - would that be sufficient evidence to get a code in February?

Would you not be able to do a roughly £200 Gift Aid and use the ability to treat it as if it was made in the last tax year option to reduce the final amount just below the £100k limit?

The £100k limit is such a punishing threshold to cross as it takes almost £6k of income just to cover the £2k tax free child care element and then the 15h you lose on top is just stilly.

Did they ever come back to you? Just found out (which is embarrassing in itself…) that my husband has had exactly the same situation and last years medical insurance pushed him over by £200…! Not sure whether I should ring them or leave it till he does self assessment in the next few weeks. Am so cross as thought I’d done all the figures right. He’s definitely under for this year so I’m not changing any of the going forward declarations.

Hi, I'm in the very fortunate position to earn over £100k and use extra pension contributions each month to bring my taxable income below £100k to be eligible for 30 free hours for my 3y/o. He'll stop going to nursery next September when he goes to reception. Even after he goes to school and I stop claiming 30 free hours, do I still need to ensure for the entire tax year (going out to April) stays under £100k? Or so long as I was pro rata expecting it to be averaging below £100k for the 6 months we claimed (April / September) am I then OK to remove my pension contributions for the latter half of the tax year and end up over £100k and that be fine?

Any guidance really appreciated.

Sadly what they’ve said is correct, I also queried this, once you lose the funding for the year you’re not re-eligible until the new tax year! Having said that, I’ve had different answers from every single individual I’ve spoken to and none of them will give me a fixed answer or a reference for the conversation!

Good luck at the tribunal, I too would be livid about making such life changing decisions to find you benefit by about £1500 at the very most.

This happened to us mid year. I believe we got the funding until we had to reconfirm and then it ended at that point. I'm sure the nursery were able to help us too and told us what was what.

Hi, he is 4. He was 3 in Sept 2022 so I was receiving the 15 hours but not tax free or the full 30. I expected based on the government website and the lady on the phone that I would be eligible from April 2023 as is 2023-2024 my pay will be below £100k however, accordingly to my appeal letter, I am only eligible to APPLY from 6 April 2023 which meant the code I got in mid April wasn't valid until September. Would have made other life choices if I knew that as its cost me 11.5 hours childcare a week for 22 weeks!!

When is your child 3?

Hey. So I was earning well over £100k in a very stressful job with lots of abroad travel and decided to take a demotion to be at home more and her my pay below £100k. After calling HMRC to discuss i changed in Jan 2023 so this tax year will come in under. Provided HMRC with contract and all info in writing in Feb on their request. Subsequently told I wasn't entitled to the 30 hours until September term! I contested this decision and going to Tribunal tomorrow about it as that was not explained on the phone nor is that made clear on their website!

Thanks for the responses. I have told them. I don't think they will ever follow it up to be honest but it is worrying me.

I got a complete mix bag of results when I contacted them last week. I was told they wouldn’t claim anything back, then got told they could claim it back and it would go debt management and they’d set up a payment plan but they’d never done it before.

Got told if I went over 100k it wasn’t cut and dry and that the person on the end of the phone would decide if I deserved to continue it. I explained my bonus is unpredictable and was told they’d look into my company to see how well it was doing to then decide if my reasons for going over were fair…despite my bonus having nothing to do with company performance.

They didn’t know their arse from their elbow.

In some circumstances there is a term's grace period (for example if you lose your job) but I'm not sure if a scenario where you start earning more than £100k counts. Worth googling grace period. I found my local council were reasonably helpful in clarifying the position when my partner was made redundant.

But if there is no grace period, as others have said, you could make additional pension contributions to keep total income below £100k for the relevant year.

Hi, I'm wondering if someone can help. In a bit of a panic. My salary is £125k and I have always contributed to my SIPP to make sure my net adjusted income is less than £100k. I have already submitted my self assessment tax return for 2022/2023. I have just been advised by my employer that I have received a benefit in kind (private medical insurance) which takes my net adjusted income for 2022/2023 to over £100k for this tax year. I have now amended my self assessment tax return and notified childcare services but am I going to be asked to pay back the 20% and 30 free hours as with 2 children this is going to amount to well over £10k and simply can't afford this... Any help or experience with a similar situation would be greatly appreciated.

No - if one person's net adjusted income is above £100,000 the entitlement is lost completely.

My DH's salary is well below the limit but I earn above it. I have been ploughing money into my pension to keep me below the £100,000 limit. It's painful at the time, especially as I am self-employed so can never be sure of what my income will be in the future, but doing the mathematics it was clear that the money saved by retaining the childcare allowances made the net cost of 'losing' that pension money negligible.

I thought I’d weigh in here with my situation.

I get a bonus which is paid at the end of March but isn’t communicated with us until mid February which is past the cut off to change pension contributions for February and only allows me to change it for March. I also cannot put any of my bonus into my pension as it’s not an option for my employer. I would take to take out a second pension.

My bonus can range from 15k to 50k and I have no idea until mid Feb what it’s going to be. So even though I can change my contributions to 100% for the month of March it would only be 100% of my basic salary (~6k).

Last year I’d paid handsomely into my pension to keep my ‘best case scenario’ bonus of 30k on the limit. However I got an unexpected 40k bonus and it took me over by 10k. I contacted them and explained my situation and having lost my eligibility for 3 months they then granted it back. I asked if I needed to pay back the 2k from the previous year but they said no.

I asked what happened if I went over again this year, would I then I have to pay it back and how would I do it. They told me that it’s unlikely that I’d have to pay it back because I had answered all the questions in good faith. They said that the compliance department could pick it up and request it be paid back but I absolutely wouldn’t be fined.

I have no idea how this will affect 30 hours going forwards though as these are due to start next April for DS1. I can only assume that again I will miss out for 3 months but then be able to claim after that?! I have no idea how I would pay that back as how would they calculate the 30 free hours value?!

If I took out a second pension and paid into that, HMRC wouldn’t have my adjusted figure until I completed my tax return which could be another 8-9 months after the tax year finishes…

No one seems to know the answer and every forum gives different answers.

Yes it should be fine, I just wonder if you need to do something else to confirm your salary won’t go above for the upcoming year if you were over the previous year? Maybe worth calling them to ask. The advisors are well aware of the pension diversion though and are absolutely fine about it.

The 30hrs and TFC are all in the same place so can apply for both simultaneously. When it’s approved, they give you a code for your childcare provider that they use to claim the hours

@prescribingmum that's very useful information, thank you. Interesting.. our situation is oh so close. My gut tells me that they don't actually check and it's done on good faith, so as long my salary is under 100K for 25/26 it should be fine (in theory). Another question, can my partner and I claim for tax free childcare and then the 30 hours free care as long as one of our salaries under 100K?

I think you can up your pensions

@JimmyN16 I can't say for sure about the application but in our case, they contacted us around this time of year to review our account because we received our bonus payments May/June and it seemed our salary would going over £100k. I explained on the phone we will put x amount of income into pension to bring back under the limit and they were happy to allow for the benefit to continue.

What I am unsure about is whether the system would auto reject the entire application for you based on prev year salary as we were both earning under at the time we set up the accounts for children

You will lose eligibility from the time you reconfirm and salary is too much there is a 3 month grace period to reconfirm.