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

[Kmj2018]

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!

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.

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.

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!

When is your child 3?

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!!

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.

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.

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.

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.

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.

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?

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.

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.

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?

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.

@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.

Yes this would work fine. As you would be re eligible in April of 2024 and would just need to reconfirm every 3 months.

@InhaleExhale10 amazing thank u!

@InhaleExhale10

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…

Nothing to stop you submitting your tax return much earlier than that. In our firm, we start submitting tax returns on 6 April for those clients who are organised and have good reason to submit asap.

Does anyone know what happens if you are over 100k paye - you've explained to hmrc that you will be paying into pension to bring it under 100k, they've accepted that and you are getting 30 hours/ tax free, but then come April you've not got enough to bring it under 100k (change of circumstances related to a house move).

Is the best policy to contact hmrc asap to let them know this might be the situation? It won't definitely be - might be able to bring under 100k as planned.

You either do it at your next re confirmation or you just go over in April and hope they don’t ask for the money back.

Of course not - you want government (taxpayer) help for potentially a household on up to 199K income per annum.
Benefits should always be based on household income to be fair to everyone.
Tax is individual - quite rightly

Thanks but if that's replying to my question we're already over - it's not about going over 100k it's about IF we can't pay into pension.

@ruby1957

Sorry, who are you to judge?

I don’t understand the question. Why would you not be able to pay into a pension? Because you need the money for a house move?

The answer is still the same, you’ve told them that you will stay under by paying into a pension, at your next reconfirmation you would confirm that you still plan to pay into a pension and are therefore eligible or your taxable pay will go over and you’re therefore ineligible. You’ll then get a grace period for free hours (can be found on your local gov website) depending on the date of your reconfirmation.