Is the childcare limit a cliff or a taper?

A cliff. Adjusted net income of exactly £100,000 keeps eligibility. One pound more removes Tax-Free Childcare and the 30 funded hours entirely. There is no reduced rate in between, which is different from the personal allowance, where the withdrawal is gradual.

Is it assessed on household income or per parent?

Per parent. Each parent's adjusted net income is tested separately against the £100,000 limit, and if either one is over, the household loses both schemes. Two parents on £50,270 each keep everything; one parent slightly over the limit and one on nothing does not.

What is Tax-Free Childcare actually worth?

The government adds 25% on top of what you pay into the account, capped at £2,000 per child per year, or £4,000 if the child is disabled. The top-up is paid quarterly. A family with two children using the full allowance receives twice the per-child cap.

Does a one-off bonus count?

Yes. Eligibility is tested against expected adjusted net income for the tax year, which includes bonus, RSU vests and other taxable income as well as salary. A single bonus that takes the year's total over the limit affects eligibility for that year.

What happens if I claim and then go over?

HMRC can reclaim top-ups paid while you were not eligible, and penalties are possible. Eligibility for the funded hours is reconfirmed periodically through the childcare service, and Tax-Free Childcare requires a declaration every three months, so the position is revisited regularly rather than settled once a year.

2026/27 tax year · England, Wales and Northern Ireland

What a bonus does to childcare eligibility

Tax-Free Childcare and the 30 funded hours end at a single point. There is no reduced rate, no taper and no averaging: £100,000 of adjusted net income keeps both, and one pound more removes both.

The cliff, precisely

Eligibility for Tax-Free Childcare and for the 30 funded hours depends on expected adjusted net income for the tax year. The statutory test is whether that figure is more than £100,000. So adjusted net income of exactly £100,000 retains eligibility, and a single pound more removes it.

This is worth stating plainly because it is genuinely unlike the rest of the tax system. The personal allowance taper takes your allowance away gradually across a range. Child Benefit is clawed back on a sliding scale. Childcare eligibility does neither. It is binary, and it turns on a figure that most people do not calculate until after the year is over.

It is assessed per parent, not per household

Each parent’s adjusted net income is tested separately, and either one exceeding the limit ends both schemes for the whole family. The consequence is a household income effect that looks arbitrary from the outside: two parents earning £50,270 each, £50,270 between them and more besides, keep everything. One parent a pound over the limit and a partner earning nothing at all loses everything.

The calculator on this page assesses one parent. If you have a partner, their figure is tested separately against the same limit, and the household position is the worse of the two.

What is actually at stake

Tax-Free Childcare tops up what you pay into a dedicated account by 25%, capped at £2,000 per child per year, or £4,000 where the child is disabled. The cap is what the calculator reports, because it is the maximum the scheme is worth rather than a projection of what any particular family spends.

The 30 funded hours are harder to put a single number on, because the value depends on your provider’s hourly rate and how many of the 38 funded weeks you use. For many families it is the larger of the two by some distance, which is why the calculator flags it as at risk rather than pretending to price it.

Taken together, and set against the 60% effective marginal rate that applies over the same range, a bonus that crosses the line can leave a household materially worse off than a smaller bonus would have. That is the arithmetic; what to do about it is not something a calculator can tell you.

See where your bonus leaves you

Figures update as you type. There is nothing to submit.

Your figures never leave your browser. Payslips are read on your device — not uploaded, not sent to an AI. The calculation runs here too. Nothing you type is stored, logged, or passed to analytics.

Where do you pay income tax?

Scottish income tax rates and bands differ and are not covered by this tool.

England, Wales or Northern IrelandScotland

How do you want to enter your pay?

Drop a payslip to fill year-to-date figures, or enter amounts yourself below. The rest of the calculator appears once you confirm.

Use figures from a payslip

Drop a file below, check the figures, then apply. Or type year-to-date totals by hand.

Drop a payslip or P60 here

or click to choose a file

PDF preferred; a clear photo works too. Read on your device only — never uploaded. One month’s slip is enough to project the year and check the £100,000 line.

Figures are extracted in your browser (text layer or on-device OCR). The file is never sent to us, never passed to an AI provider, and is gone when you close this tab.

Choose how to enter your pay above to see your figures.

Enter figures yourself, or drop a payslip. The rest of the form appears once you confirm.

How adjusted net income is built up

The figure tested is not your salary and not your gross pay. It is adjusted net income: total taxable income for the year, less pension contributions and Gift Aid donations, grossed up where the rules require. The step-by-step explanation covers each component, and the calculator above shows its working line by line.

For families with variable pay, the components that most often move the figure are bonus and RSU vests. Both are employment income in the tax year they are paid or vest, and both count in full.

The timing problem

Tax-Free Childcare requires a declaration every three months, and eligibility for the funded hours is reconfirmed on a similar cycle through the childcare service. The declaration asks about expected adjusted net income for the tax year, which means you are being asked to forecast a figure that may depend on a bonus not yet announced or a vest whose value depends on a share price.

Getting the forecast wrong in one direction means claiming support you were not entitled to, which HMRC can reclaim, with penalties possible. Getting it wrong in the other direction means not claiming support you were entitled to. Neither is comfortable, which is the practical reason people run the numbers repeatedly through the year rather than once.

What this tool does and does not do

It reports the capped value of the Tax-Free Childcare top-up you would be giving up, across the number of children you enter.
It flags the funded hours as at risk rather than pricing them, because their value depends on your provider and your usage.
It assesses one parent. A partner’s adjusted net income is a separate test against the same limit.
It does not model the High Income Child Benefit Charge, which uses adjusted net income too but has its own thresholds and its own taper.
It does not know whether a child is disabled, so it applies the standard per-child cap throughout.

The eligibility rules themselves are set out on gov.uk, and there are conditions beyond income, including minimum earnings and immigration status, that this calculator does not test.