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Original poster

Gone over 100k, what does this mean for tax free childcare?

64 replies

UmberFatball · 20/12/2024 06:34

Morning mumsnetters
My DH has ended up getting a bonus that will take us over the 100k threshold for the year. We considered putting more into pension but actually we've had lots of building work this year and could do with the bonus to rebuild some savings!
What does this mean for tax free childcare now? Next time I need to do the declaration I'll inform them that his earnings have gone over 100k so I assume I won't be able to use it from then?
In this financial year my youngest changed from nursery (where he was getting 30 free hours) to school. How will we have to pay this back? I know he would have been entitled to 15 hours so will they calculate the difference?
We've also used TFC to pay for after school clubs so will we have to pay this back for the whole financial year?
Anyone who's been in this situation and could advise please?

OP posts:
DarkAndTwisties · 28/12/2024 11:31

Gatecrashermum · 28/12/2024 00:35

I'm sorry to be stupid, but I don't understand how it's "not worth" earning more than 100k if it's less than 140k?

Husband has just gone over 100k, we have a tiny baby. I'm unable to work due to disability. It seems crazy we don't get the 30 free hours- I've thought of suggesting he drops his hours in 3 years time for us to get the childcare but it only seems worth £9k or so in terms of the childcare you get? As in if I were to pay it, I'd be paying £9k.

I've googled it and can't get my head around it, sorry (probably should be trying to sleep next to my baby)

If he's only just over, I would absolutely put a little bit more into his pension to get it below £100k, so that you can keep the 30 free hours and tax free childcare.

MidnightPatrol · 28/12/2024 11:43

DefyingGravy · 27/12/2024 23:42

It makes economic sense to keep the high earners working. Nursery for 2 in London must be getting on for £4k a month now? And someone on £90k would take home about £5k, £5,500 a month.

Show quote history

£2-2.5k round here as of Jan 2025.

You could easily spend £5k a month on two nursery places - if you have a student loan that’s >100% of a £100k salary.

Jm3799 · 15/01/2025 13:53

PineapplePizzaz · 20/12/2024 08:45

This happened to me last year unexpectedly- similar to your situation. I read around forums and the consensus was that if it was unexpected, they don’t come to you to claw back the already used funding in the year, albeit you do lose the benefit entirely on a go-forward basis. Good job it happened for you now that your kids are in school since at least 20% on the clubs isn’t as noticeable as 30 hours of nursery!

how do you prove if it’s unexpected or not? Do you contact HMRC / childcare… will they contact you or do you just not resubmit eligibility?

MsCactus · 15/01/2025 14:07

UmberFatball · 20/12/2024 07:26

Thanks all, it's more like the scenario of pay went up to 95k during the tax year and a 15k bonus, we've already put lots into pension and he'll definitely be over as gets a car allowance too. Problem is we do really need the money now rather than in our 60s! Big loans/mortgage/house renovations etc. I will read the link above and try to work out if we'll have to pay back thank you
I think I next need to declare on the portal in the next week so just trying to pre-empt what comes next

I think you'll still end up with less money this year though. You'll only take home 50-40% of that 15k bonus after tax, so approx £7.5k ish, but then you'll lose tax free childcare - which will likely be more than £7.5k.

Pension is tax free, so you'll keep £15k of the bonus (potentially pay a little tax when you take it out, but v small) and you might even get the same amount month to month with the money you get for free childcare

Do your sums and work it out properly. But I know for us, we end up with less money month to month if we kept my DHs salary over 100k. Also less money in pension

MsCactus · 15/01/2025 14:10

UmberFatball · 20/12/2024 07:54

He does 8% pension which is the max his employer matches already. At what point does it make it worth it to actually earn over 100k and not need to put everything over it into pensions? Feels crazy to be working hard now but not get any benefit of it!
The bonus is not a given and he hasn't had one this big before, so when I previously declared I didn't expect to be over 100k, I will now obviously change my declaration. I'm not so worried about losing the 20% top up it's more the 30 hours free childcare we had from april-august?

I think you need to be on over £140k for it to not make financial sense to put anything over 100k into pensions with getting full time tax free childcare. At least it was around that for my family's calculations

MyQuickLimeFawn · 15/01/2025 14:16

But isn’t the whole point that you are now deemed able to afford to pay it…

MidnightPatrol · 15/01/2025 15:49

MyQuickLimeFawn · 15/01/2025 14:16

But isn’t the whole point that you are now deemed able to afford to pay it…

There is no point, it’s just an arbitrary cut off.

OldieButBaddie · 15/01/2025 15:53

If you have already put 8k into the pension, you will only need to put another 2k (or just over) to bring it below 100k. It makes sense as others have said due to the marginal tax rate, let alone the childcare!

Original poster
UmberFatball · 15/01/2025 17:42

Thanks all for the additional thoughts.
We no longer use all the TFC allowance as luckily out of nursery and now just using wrap around care so probably losing more like £1000 in top ups, no way near £7.5K!

OP posts:
Blossom428 · 10/03/2025 12:12

Hi, sorry coming to this thread late- but we are in a similar situation- my partner has found out he will be going over the 100k bracket.
To pay into his pension is it just a matter of him speaking to his Hr to say he wants to pay and additional amount into his pension then this will knock down amount of total taxable income?
I'm getting a bit confused with the adjusted net income.

Badbadbunny · 10/03/2025 12:20

If he's at £110k of income, he should pay at least £8k into a pension scheme. HMRC pay in basic rate tax relief, so £10k goes into the pension. It saves £4000 income tax off his tax bill (because he's is in the 60% marginal tax band). So for a cost of only £4k (£8k into pension less £4k reduced income tax), he gets a pension investment of £10k gross. AND you get to keep your free childcare.

It's a no brainer!

ISeeCheekyFuckers · 10/03/2025 12:29

Depends whether his work scheme allows that. Mine (defined benefits) doesn’t. He can put it into a private pension scheme if not.

ThatMintReader · 13/03/2025 22:29

WeeFinbar · 20/12/2024 07:05

Are you aware of what makes up your “Adjusted net income”? As PP mentioned, the biggest potential lever to bring you below £100k is your pension, but any gift aid donations can also be deducted.

if you are still over and don’t want to put more in a pension, it comes down to, were your prior declarations in the year reasonable. If they were, the n no payback required I think. Useful link here…

https://community.hmrc.gov.uk/customerforums/pt/275dbd06-5b4b-ee11-a81c-6045bd0ba09e#:~:text=Tax%2DFree%20Childcare%20(TFC),100%2C000%20in%20the%20tax%20year.

Hey, the link to this doesn’t seem to work for me and takes me to a generic personal tax customer forum page, can anyone find the link / know what it said?

JoAb8 · 01/03/2026 15:48

WeeFinbar · 20/12/2024 07:05

Are you aware of what makes up your “Adjusted net income”? As PP mentioned, the biggest potential lever to bring you below £100k is your pension, but any gift aid donations can also be deducted.

if you are still over and don’t want to put more in a pension, it comes down to, were your prior declarations in the year reasonable. If they were, the n no payback required I think. Useful link here…

https://community.hmrc.gov.uk/customerforums/pt/275dbd06-5b4b-ee11-a81c-6045bd0ba09e#:~:text=Tax%2DFree%20Childcare%20(TFC),100%2C000%20in%20the%20tax%20year.

Hello, WeeFinbar, I don't suppose you (or anyone else) has a screengrab of this link which could be shared?

These forums were apparently shut in June 2025 but such a reference would be useful for me in appeal

Thanks,

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