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Original poster

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

66 replies

Kmj2018 · 17/05/2023 22:44

Hi,

just wondering if anyone can give me advice on this. So I’ve reconfirmed our eligibility on tax free and 30hrs free childcare as nomal but this morning we had a phone call from hmrc asking for more details on my partners earnings. His job is made up of basic salary , bonuses and commission so it’s so hard to tell what he’ll earn end of the tax year but he has just told me he’s 90% sure he will go above 100k but told hmrc he wouldn’t hit 100k just in case that 10% chance he doesn’t . So my question is what happens if he does go above do we simply just have to pay it back or will there be other consequences like a penalty. We just want to do what’s right but not sure what that is. We definitely don’t want to be taking taking the biscuit!

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UniKnow · 17/08/2023 15:10

I have twice claimed Tax Free Childcare and later discovered that OH’s salary went over £100k. Each time he effectively had to repay the top up when completing his self assessment (he was asked to pay an amount equal to the amount of top up we had received - ordinarily he wouldn’t pay anything as entirely PAYE). So while I think the advice to claim until you know for sure you’re not eligible is correct (as you can’t backdate it) you should expect it to be clawed back at a later stage. Not sure about the 30 hours though as I’m unsure what monetary value they’ll place on that.

JimmyN16 · 16/08/2023 13:23

@Dicenunu hey there. So someone told me that it needs to be the previous tax year, but it sounds like you get assessed every 3 months from application. I plan on claiming for 30 hours from September 2025, so I plan on making sure that my salary does need exceed 100K between April 2025 and April 2026. What are your thoughts?

Dicenunu · 16/08/2023 12:40

I am also in a very similar situation….
@JimmyN16, did you find out anything about your query? If that’s the case, would you share it please? Anyone knows?
Thanks

JimmyN16 · 11/07/2023 14:30

I'm in a similar situation. Let's say my income after tax this tax year is over 100K, and my child starts nursery after the 5th April next year. Which tax year will the government use? This year, or the next year that my child starts nursery? I'm trying to work out when to sacrifice more into my pension to reduce my salary.

GiltEdges · 24/05/2023 14:08

user50316 · 17/05/2023 22:48

I'm no expert on this but we have to reconfirm our details every 3 months and they check them what your earnings are etc through your NI contributions.
To add as well, it's based on your take home pay, so it could be worth him "overpaying" into his pension for example or finding ways to bring down his take home pay.

It isn't based on take home pay. It's based on gross pay, less any pre tax deductions. Of which pension would be one example.

RoseLarkin · 24/05/2023 13:53

This happened to us a few years ago, we started the year not thinking DH would earn over 100k, then part way through the year it became clear he would so the next time we reconfirmed I had to tick that we weren't eligible, we haven't had to pay it back and haven't had any follow up about it at all, I did wonder whether DH would have to declare it in his tax return the following year, in the same way you do if you claim and then pay back child benefit, but he didn't.

Original poster
Kmj2018 · 24/05/2023 13:34

@Nearlyamumoftwo thanks that explains everything 😊

OP posts:
Nearlyamumoftwo · 24/05/2023 10:25

So at this moment in time you have no idea if he’ll receive a bonus so you are confirming your eligibility in good faith. (yes sounds like you know it will happen but for simplicity, let’s say you have no idea). Once you’re asked to confirm your eligibility in January 2024 you will have to decline and you will not be entitled to tax free child care or 30 hours (because money he received in December tips you over the edge). You will not need to pay anything back, because when you were receiving your top ups, he was under £100k. How much over is he going? You could consider putting the surplus into a pension as a lump sum, but it’s a case of weighing up if you could “do without” that money until you’re in your 60s (but you will then get money off your childcare bill!). I think you can put in a max of £40k extra right now, but it’s due to increase soon - although not sure on that

Original poster
Kmj2018 · 24/05/2023 09:18

Obviously when we do go over we will inform them immediately

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Original poster
Kmj2018 · 24/05/2023 09:17

@Nearlyamumoftwo thanks that’s really helpful. No right now he has not gone over 100k so we told hmrc we are under 100k I’m not sure what happens if he does go over. My prediction is by January he will have gone over as he will have received his xmas bonus so does that mean we will have to pay back everything that was given to us from April 2023 or do they simply just stop the 30hrs and tax free?

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prescribingmum · 23/05/2023 22:59

@Nearlyamumoftwo I was under the impression you had to pay it back for the relevant financial year if you were no longer eligible but I could be mistaken too.

As far as I’m aware, there are no penalties unless you were deliberately dishonest on the reconfirmation

prescribingmum · 23/05/2023 22:58

We were in a similar situation last 2 years but DH’s bonus is announced in April and paid in June to allow planning for the tax year. He made sure he diverted enough into his pension so we remained under the £100k limit for TFC.

I was under the impression most companies pay bonuses towards the start of the financial year or am I mistaken?

Nearlyamumoftwo · 23/05/2023 22:57

Just read your message again, if you confirm
youre eligible when you’re not then you’ll have to pay it back, and perhaps pay a fine.

if you reconfirm in good faith in the September, and he suddenly gets a pay rise which tips him over the edge in October, my understanding is you “get away with it” as you reconfirmed in good faith and they’ve probably allocated the £500 to you, then of course from the January you will need to confirm you are not eligible and the top ups will stop

Nearlyamumoftwo · 23/05/2023 22:54

Hi, we are in a similar position. Have you applied yet? When you do, ask yourself “as of today is his taxable income £100k”. If the answer is no, then you are eligible and you need to reconfirm every 3 months, even if you predict he will go over later in the year. It’s not happened yet and essentially an assumption. Once his bonus / pay is reviewed (and he has started to receive it) and he is tipped over the limit, the next time you are asked to reconfirm you’ll need to say you’re not eligible.

and as someone else has said, it’s taxable income. If his gross income is £101k, but he’s paying 10% in to his pension then you’re fine. If he is considerably over, You could pay more into your pension / take out more benefits to get you below but then you need to consider if it’s worth it to save £300 or so a month

Original poster
Kmj2018 · 17/05/2023 23:12

@user50316 Thanks for your advice. I will look into it

OP posts:
user50316 · 17/05/2023 22:48

I'm no expert on this but we have to reconfirm our details every 3 months and they check them what your earnings are etc through your NI contributions.
To add as well, it's based on your take home pay, so it could be worth him "overpaying" into his pension for example or finding ways to bring down his take home pay.