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Tax-Free Childcare: The £100k Eligibility Cliff Nobody Talks About

Go over £100,000 ANI and you usually lose access to TFC entirely. That is up to £2,000 per child per year gone. Here is what to do about it.

CG
CliffGuard Team · Updated 13 April 2026 · 6 min read

This guide uses 2026/27 tax year rules unless stated otherwise. Scottish rates and childcare rules can differ.

?Quick answer

Tax-Free Childcare (TFC) gives you 20% top-up on childcare costs, up to £2,000 per child per year (£4,000 for disabled children). But if either parent's ANI goes over £100,000, you usually lose eligibility entirely. Unlike the Personal Allowance taper, there is no gradual reduction: it is a hard cliff. Pension contributions or salary sacrifice that bring your ANI to £100,000 or below can restore eligibility.

What is Tax-Free Childcare?

Tax-Free Childcare is a government scheme where for every £8 you pay into a childcare account, the government adds £2. That is a 20% top-up, capped at £2,000 per child per year (£10,000 of childcare spending).

To qualify for Tax-Free Childcare, you and your partner (if you have one) will usually need to:

  • each have Adjusted Net Income of £100,000 or less
  • each expect to earn at least the minimum amount over the next 3 months
  • not be receiving Universal Credit
  • not be using a conflicting childcare support scheme
  • have an eligible child using approved childcare

Minimum earnings test

The minimum earnings test is not one fixed number for everyone. It depends on your age and circumstances.

For 2026/27, the usual minimum over the next 3 months is:

  • £2,643.68 if you are aged 21 or over
  • £2,256.80 if you are aged 18 to 20
  • £1,664 if you are under 18 or an apprentice

There are some exceptions and special cases, for example if you:

  • have irregular income
  • are self-employed and recently started working
  • are starting a new job
  • are on certain types of leave

Why the cliff is so harsh

The £100,000 limit is a hard boundary, not a taper. If your ANI is £100,000 you usually qualify. Once ANI goes over £100,000 you usually do not.

For a family with two children in nursery, losing TFC means losing up to £4,000 per year in government top-ups. Combined with the 60% tax trap (losing Personal Allowance), crossing £100,000 by a small amount can cost you thousands.

This is why understanding your ANI and planning contributions before the end of the tax year matters. Even a small pension top-up can keep you at or below £100,000.

See your exact numbers

Enter your salary, pension and household details. CliffGuard calculates your ANI, marginal rate and shows you exactly how much you could save.

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How to keep your eligibility

The most effective approach:

  1. Calculate your ANI using CliffGuard or manually
  2. If you are close to £100,000, increase pension contributions (salary sacrifice or SIPP) to bring it down
  3. Check eligibility quarterly: TFC eligibility is re-confirmed every 3 months

For someone earning £105,000, a £5,001 salary sacrifice into pension would restore TFC eligibility. That sacrifice might cost around £250/month in take-home pay but recover £2,000-£4,000/year in childcare top-ups, plus save tax at the 60% marginal rate.

Frequently asked questions

Does TFC apply to all ages of children?

TFC is available for children up to age 11 (or 16 if disabled). The child must not yet have started their September following their 11th birthday.

Can I use TFC and 30 hours free childcare together?

Yes. You can claim both TFC and the 30 hours free entitlement (in England, for 3-4 year olds). The £100,000 ANI limit applies to both schemes.

What if my partner earns over £100k but I do not?

Both parents usually need to meet all eligibility criteria individually. If either parent has an ANI over £100,000, the household usually loses TFC. It is the higher earner who typically needs to take action.

Check your tax position in 3 minutes

Enter your income details and see your ANI, marginal rate, Personal Allowance and the exact pension contribution needed to escape the trap.

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Related guides

tax cliff

The £100k Tax Trap: Why You Lose 60p of Every Pound Over £100,000

child benefit

HICBC Explained: When Claiming Child Benefit Actually Costs You Money

pension strategy

Salary Sacrifice vs SIPP: Which Is Better for £100k+ Earners?

Sources checked: GOV.UK Income Tax, Tax-Free Childcare, Child Benefit, pension tax relief and Scottish Income Tax guidance.