Salary sacrifice to claim free 30 hours a week childcare

[JimmyN16]

Hello there,

My fiancé and I recently had a baby girl. We are looking to put her into Nursery between March and June next year. I will earn over 100K in this tax year. I was hoping to reduce my earnings over 100K using salary sacrifice through my employer to gain eligibility for the 15 free hours starting April next year.

My question is.. when would the taxman calculate my earnings from? Let's say she starts after the 5th of April next year, would I have to start reducing my salary for the 24/25 tax year, or the prior one? 23/24

Hope that makes sense!

I don’t believe salary sacrifice will affect your adjusted net income.

Depends what it’s for. Pensions it would.

For clarity. I know that salary sacrifice into my pension at gross income will reduce my income. My question is, what tax year will the government take it from?

Previous year.

@AmITooOldToDoThis thank you very much!

The 100k limit applies to the ‘current’ tax year when you confirm eligibility (which you have to do every 3 months). I suppose if you weren’t claiming until the 24/25 tax year then you could exceed the limit in 23/24. But, since you have to apply a few months in advance, I’m not sure how nuanced the eligibility form is. It may be prudent to stay within the limit in 23/24 to avoid any headaches

I also wouldn't get too excited about the funding yet, nothing has been confirmed.

Pay a lot into pension.

@2thumbs that's a clear and concise response. thank you very much.

@KateyCuckoo gotcha. It's still some time away. You just have to be prepared well in advance! thank you

@caringcarer thank you.

@tealandteal it does. the sacrifice is made before being taxed thus lowering your net income.