We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Tax Free Childcare
Options

Snakeeyes1875
Posts: 4 Newbie

in Cutting tax
Hi,
I am hoping someone on here can help me, I am trying to establish whether we qualify for tax free childcare allowance.
I currently earn £85k per year, however this year I was paid an unexpected £40k bonus, on top of that I have a company car and healthcare which amounts to a BIK of £10,608. I am currently paying £32,565 per year into my work pension (off top line pay) to reduce the tax due on my bonus and general salary.
So my questions are:
1. Do I include the £10,608 when trying to work out adjusted net income to see if I qualify for the tax free childcare?
2. If so should I put even more into my pension to take my adjusted net income to below £100k?
Thanks in advance
I am hoping someone on here can help me, I am trying to establish whether we qualify for tax free childcare allowance.
I currently earn £85k per year, however this year I was paid an unexpected £40k bonus, on top of that I have a company car and healthcare which amounts to a BIK of £10,608. I am currently paying £32,565 per year into my work pension (off top line pay) to reduce the tax due on my bonus and general salary.
So my questions are:
1. Do I include the £10,608 when trying to work out adjusted net income to see if I qualify for the tax free childcare?
2. If so should I put even more into my pension to take my adjusted net income to below £100k?
Thanks in advance
0
Comments
-
Should possibly have also noted I am in Scotland0
-
Snakeeyes1875 said:Hi,
I am hoping someone on here can help me, I am trying to establish whether we qualify for tax free childcare allowance.
I currently earn £85k per year, however this year I was paid an unexpected £40k bonus, on top of that I have a company car and healthcare which amounts to a BIK of £10,608. I am currently paying £32,565 per year into my work pension (off top line pay) to reduce the tax due on my bonus and general salary.
So my questions are:
1. Do I include the £10,608 when trying to work out adjusted net income to see if I qualify for the tax free childcare?
2. If so should I put even more into my pension to take my adjusted net income to below £100k?
Thanks in advance
2) Yes - you need to be clear on the method of relief - salary sacrifice, net pay arrangement or relief at source.
Hopefully you mean the bonus was paid this tax year (after 6 April)?0 -
1) Yes the bonus was paid in June 2025.
I was caught out and my tax code was changed to a negative to allow HMRC to reclaim the under paid tax, I was only paying £355 per month into my pension, but I have now adjusted this to a higher value to try to reduce the overall tax bill.
2) I have asked my employer to increase my pension contribution to £3500 per month, this is being taken before tax and added straight into my pension. I am not sure of the terms, but assume this is classed as Salary Sacrifice?
So if I am interpreting your response correctly, I would have to pay an additional £3043 into my pension to take me below £100k adjusted net income?0 -
Snakeeyes1875 said:1) Yes the bonus was paid in June 2025.
I was caught out and my tax code was changed to a negative to allow HMRC to reclaim the under paid tax, I was only paying £355 per month into my pension, but I have now adjusted this to a higher value to try to reduce the overall tax bill.
2) I have asked my employer to increase my pension contribution to £3500 per month, this is being taken before tax and added straight into my pension. I am not sure of the terms, but assume this is classed as Salary Sacrifice?
So if I am interpreting your response correctly, I would have to pay an additional £3043 into my pension to take me below £100k adjusted net income?
Do you have any other income that would affect your ANI, savings interest, dividends etc - you will need to factor this into your calculation of what further pension payments you need to make.0 -
All other savings are in a shares and stocks ISA.
I do not know if I am paying NIC as this is the first month that I have altered the pension contribution and I have not been paid yet, I have only just asked my employer to change the contribution as of this month.0
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 351.2K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.7K Spending & Discounts
- 244.2K Work, Benefits & Business
- 599.3K Mortgages, Homes & Bills
- 177K Life & Family
- 257.6K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards