High earner options on childcare.

Fitzkepp

Hi, in the lucky position of earning over a taxable £100k (after pension deductions). We have a 2yr old currently costing over £1.2k a month in childcare, who turns 3 in November. Previous kid (now 7) was a different earning situation and we qualified for the 30hrs free childcare a week once he turned 3, but this time it looks like it's 15hrs max. 

Seen it discussed earlier this year in terms of the "cliff edge" higher earners face by earning over the threshold, and not trying to game the system, but aside from looking into what I can do pension-wise are there any avenues people can recommend investigating to help tap into the 30hrs once he turns 3?

Jinglish

All you can do is increase anything that counts as "salary sacrifice" that essentially reduces your income tax liability (P60). So increasing your pension contributions is the obvious answer, but your employer (assuming you are employed) might offer other optional benefits such as company shares, healthcare packages, car schemes etc that can reduce you below the £100K limit. What is not clear is if the income assessment will be based your previous P60 (April 22/23) or will they predict what you will earn for April 23/24 or base it on current wage slips. If it is the forma then it is already too late to make any changes assuming that P60 showed >£100k. Good luck and please report back what you do/did.

sheramber

You confirm your expected earnings  for the next three months at a time. At the end of the year your annual adjusted net   income will be checked.

Note it not your taxable income that counts but your adjusted net income.  

This is your total income from all sources less allowable deductions.  

Whether pension payment reduce your  adjusted net income depends on how they are paid

Adjusted net  income 

https://www.gov.uk/guidance/adjusted-net-income

HappyHarry

A one-off contribution to a pension scheme that brings your net adjusted income below the £100,000 limit before the end of the tax year will suffice. This could be to your employer's scheme or to a private pension.

Optional benefits like car schemes and healthcare packages (as mentioned in a post above) are taxable benefits in kind, and so will not necessarily reduce your adjusted net income.