Help re free hours and tax free childcare

[AlwaysConfused198]

Hi all.

I just wonder if someone could advise on what I need to do re tax free childcare and free hours.

Husband earns a basic salary way below the 100k threshold so I have been re confirming each month our eligibility.

He gets a bonus every 3 months and we never know how much. His Feb bonus has been unexpectedly much larger than we could have anticipated and takes us just over the 100k threshold, obviously we completly understand we are no longer eligible for the assistance but I'm confused about what I do.

My next confirmation date is to re confirm before 17th march at which point I will tell them our change in circumstances but do I need to tell them before because we have gone over 100k in Feb? I don't want to do anything wrong or have to re pay in future? We have never been in this situation before and have no idea what his bonus will be in advance so couldn't plan better .

Thanks in advance

Just tell him to contribute a bit more to his pension to bring it down to 100k for the tax year.

Unfortunately I think it's to late for that now as we had no idea of the bonus and it's paid so we accept we lose moving forwards which is fine

New panic though. As we went over this financial year will we have to pay anything back? Slowly starting to panic about that

We have this issue every February to a more or less degree. We contribute enough to his private pension to bring his earnings down to circa 99k. It’s not worth the loss of the funding for what you get after tax. Also means it keeps it simple xx

Just to add - they might call you if he is paye as they do monitor payslips and expected annual income to make sure people are being honest. If you say he is contributing extra to his pension to make sure he doesn’t breach 100k they’ll be fine about it. You could proactively call them and explain if it makes you feel better.

Unfortunately we realised far far too late as we didn't even imagine we would ever come close! We actually only have 5 months of nursery left so it's not awful but still a big hit but now more worried on them wanting money back

It’s not too late, your net adjusted annual income needs to be less than 100k, just contribute the extra before the end of the tax year.

If he can’t adjust his contributions to his work pension you can set up a SIPP on one of the investment platforms and contribute there.

As PP said it’s not too late!! As long as the money is in a SIPP by the end of March you will have nothing to declare :-) it might be too late for company pension as I know where I work you have to give so much notice. I suppose the other option would be to let them know the situation but honestly opening a SIPP is far easier and means you keep the money xx

Thanks all. I actually don't know what a SIPP is and how that would work!

Argh such a stress!

If we can't get the income down will they want us to pay back the free hours we received

Just to add that if you have earned over 100k in the financial year Apr 23-Apr 24 then you will also have to complete a tax return and submit by the end of Jan 25. As you will lose some of your personal allowance over 100k you may have to pay some additional tax, possibly collected via his tax code next year if it’s a few thousand but I’d check this.

As others have said, I would find out what you can do to add into his pension via salary sacrifice or a SIPP (I don’t know anything about these) to get the total down below 100k before April 5th. I would contact his HR department and find out the process for adjusting pension contributions, you might only be able to change this once a year or it might take a few months to implement etc.

Thanks all. He works for a v small company so HR had no idea unfortunately about it either .

I think I will call them today and explain we did not expect this to happen and see what they say! We only have 3 payments for nursery after April due to school starting so we are happy to accept we need to pay for the full fees from then.

Im going to look into a SIPP but a brief search said you could only pay in 3k per year and it looks like we will go over by 6k and I wouldn't know how to sort out the adjustment as his next pay will be very average basic salary on 40k a year job. Like I said this was so unexpected.

I just told him he will need to do self assesment next year . I wonder if at that point they will ask for money back. Or if it works on the quarterly basis like re confirmation.

Oh how much easier life would have been if we had had an April bonus .

If he's earning over £100k in the tax year he can pay far more than £3k into a SIPP. The annual allowance in terms of what he can contribute is £60k (or total salary, whichever is lower). In his case he can save up to £60k into his pension.

He shouldn't even need to set up a SIPP. He can call his workplace pension provider and say he wants to make a voluntary extra contribution. They will tell him what to do.

It is really worth doing this as it's not just your tax-free childcare / free hours on the line. People who earn over £100k start to lose their personal tax allowance, which means he won't have paid enough income tax and will get a bill there too.

If he chucks the £6k into a pension now, you'll keep the tax-free childcare, the free hours, AND the personal allowance for income tax.