Is it based on household income or individual income?

Individual. Either parent having adjusted net income over £100,000 disqualifies the household, so a couple earning £99,000 each keeps the support while a single earner on £101,000 loses it.

How much is the £100,000 childcare cliff worth?

Tax-Free Childcare is worth up to £2,000 per child per year. The 30 funded hours are worth your nursery's hourly rate multiplied by 30 hours and 38 weeks, which varies enormously by region. On top of that you lose personal allowance at 60p in the pound between £100,000 and £125,140.

Can a pension contribution get me back under £100,000?

Yes. Pension contributions reduce adjusted net income, which is the figure childcare eligibility is tested against. A gross contribution equal to the amount you are over the line brings you back under it, and because that income would have been taxed at around 60%, the real cost is roughly 40p in the pound.

The £100,000 Childcare Cliff Edge

Q: What happens to childcare support at £100,000?

Both Tax-Free Childcare and the 30 funded hours stop entirely once you or your partner expects adjusted net income over £100,000. There is no taper. One pound over the line and both are lost for the period.

Short answer: at £100,000 of adjusted net income you lose Tax-Free Childcare and the 30 funded hours entirely, on the same day, with no taper. For a household with a child in nursery, that cliff is frequently worth more than the 60% tax everyone talks about. It is entirely possible for a pay rise to leave you worse off.

I have had this conversation with people who found out when their childcare application was refused. Nobody at work mentions it, and the pay rise letter certainly does not.

What actually goes at £100,000

Three separate things are tested against adjusted net income, and they stack.

Tax-Free Childcare. The government adds £2 for every £8 you pay in, up to £500 a quarter, so £2,000 a year per child, or £4,000 for a disabled child (gov.uk).
The 30 funded hours. Thirty hours a week for 38 weeks of the year for children from 9 months to 4 years old (gov.uk).
Your personal allowance. £1 gone for every £2 above £100,000, which is the 60% effective rate (gov.uk).

The first two are cliffs, not tapers. The wording is that you are not eligible if you or your partner expects adjusted net income over £100,000. One pound over and both go.

And note you or your partner. A household where one parent earns £101,000 and the other earns nothing loses the lot. A household where both earn £99,000 keeps everything. That is not a typo.

What it is worth in pounds

I am not going to invent a national average nursery cost, because the number that matters is yours and the range across the country is enormous. Work it out with your own rate instead.

What you lose	How to price it
Tax-Free Childcare	£2,000 per child per year, straightforwardly
30 funded hours	Your nursery’s hourly rate × 30 hours × 38 weeks
Personal allowance	60p in the pound on everything between £100,000 and £125,140

Put your own hourly rate into the middle row. At £7 an hour that is £7,980 a year. At £12 an hour it is £13,680. Add the £2,000 and you can see why a £3,000 pay rise sometimes costs a household five figures.

Child Benefit, which is a different threshold

Worth knowing because it also uses adjusted net income and it catches people earlier. The High Income Child Benefit Charge starts once adjusted net income passes £60,000 and claws back all of the Child Benefit by £80,000, at 1% for every £200 of income above the threshold (gov.uk).

So between £60,000 and £80,000 there is a second, gentler squeeze, and it is one of the reasons the marginal cost of a pay rise in this country is so uneven.

The fix, and why it works

Adjusted net income is not your salary. It is a calculation, and pension contributions reduce it. That is the entire lever.

If your adjusted net income would be £104,000, a gross pension contribution of £4,000 brings you to £100,000 and hands back the childcare, the funded hours and the slice of personal allowance. The contribution costs you roughly 40p in the pound because the income you are redirecting was going to be taxed at 60%.

Which means the real cost of that £4,000 contribution is around £1,600 of take-home, and it can return several thousand pounds of childcare support on top of the tax. There is nothing else in personal finance that does this.

The mechanics depend on which type of pension arrangement you are in, and it genuinely matters: does salary sacrifice reduce your adjusted net income? If you would rather just have the number, the get under £100,000 calculator works it out.

Timing, because this is the bit that goes wrong

Eligibility for Tax-Free Childcare and the funded hours is based on what you expect your adjusted net income to be for the tax year, and you reconfirm it every three months. So the planning has to happen during the year, not when you file a return eighteen months later.

The usual disaster is a bonus in February that takes the household over, discovered in April. If your employer offers bonus sacrifice, find out now when the election window opens, because a salary sacrifice has to be agreed before you become entitled to the money.

My honest take

This is the most poorly signposted trap in the UK tax system, and it lands hardest on households with young children and one high earner, which is a very common shape. I have sat with people who turned down a promotion once they saw the numbers, and in a couple of cases that was the right call.

You do not need to turn down the promotion. You need to know where the line is before you cross it, and to have the pension paperwork ready.

Worth saying plainly: this is financial education, not regulated advice or a personal recommendation. Figures are 2026/27 and the income tax bands quoted apply to England, Wales and Northern Ireland. Childcare eligibility rules have conditions beyond income, including working hours and immigration status, so check the gov.uk pages for your own situation. Rules change.

The £100,000 childcare cliff edge