Taxfree chidcare eligibility

thejinx6

Hey All,

Have looked to see if this has already been asked but cannot see anything that has an answer so here goes:

My partner and I have a 3yo child at nursery and we qualify for the taxfree childcare from the gov to help with nursery fees as we both work. The eligibility for this is that neither parent can earn over £100K/year.

I am recently about to change job that might potentially get me near the £100K threshold in terms of base + bonus. I have it in my mind that it is potentially worth taking a lower salary just below the £100K threshold to still qualify for the taxfree help (of up to £2K per child per year) rather than say, accept a higher salary of for example £101K.

One thing that is a little murky on the wording of this is that you may potentially be able to earn over the £100K threshold but put enough into a pension (either through the employers portal, or indeed into a private SIPP after you have been paid the money) to take your earnings below the £100K thrshold.

Has anyone else done this or have advise as to whether this would still allow us to qualify for the taxfree childcare gov topup? I just dont want to get into a position where I accidentally get paid just too much to not get the gov help, and would be better off actually earning less.

Certainly if I am having to think about this then its a good problem, but any advice would be helpful!

Thanks.

Yamor

Entitlement depends on 'adjusted net income', which is generally your gross income, less pension contributions (grossed up where relevant) and gift-aid donations (also grossed up).

So, yes, making pension contributions will bring your income down for these purposes.

kaMelo

There will be many who will have increased their pension contributions to keep their adjusted net income below £100,000. It's not just tax free childcare, there is also the loss of personal allowance too.

thejinx6

Many thanks for the responses folks, appreciated. I thought that may be the case but just wanted the sanity check so I didnt make an idiotic decision that somehow cost me