Can I claim free childcare while earning over £100,000?

Can I claim free childcare earning over £100,000?

Can I claim free childcare while earning over £100,000?

All 3 and 4-year-olds in England qualify for 570 hours of free childcare per year. This is commonly referred to as Nursery Entitlement Funding (NEF). You can divide these hours as you wish, but they are commonly used as 15 hours of childcare per week for 38 weeks of the year.

These hours can only be redeemed with ‘approved childcare’ providers. These could be childminders, nurseries, home care agencies or schools. You can find the relevant directories for England, Wales, Scotland and Northern Ireland here.

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Am I eligible for 30 hours free childcare?

Some 3 and 4-year-olds qualify for 30 hours of free childcare for 38 weeks of the year, effectively adding an extra 15 hours to the base amount offered to everyone.

In order to qualify, you (and your partner, if you have one) must be working, on annual leave, or on parental leave. You must also expect to earn a minimum amount, depending on your age.

Both you and your partner, if you have one, are expected to earn this minimum amount – it is not a combined household total. The minimums reflect working at least 16 hours a week on minimum wage, and are as follows:

  • £1,000 if you’re under 18 or an apprentice.
  • £1,420 if you’re aged 18 to 20.
  • £1,909 if you’re aged 21 or 22.
  • £1,976 if you’re aged 23 or over.

There are some exceptions to this work requirement for individuals with disabilities, or who are not paid regularly throughout the year. You can find the finer details here.

Can I claim free childcare if I make over £100,000 annually?

This depends on your ‘adjusted net income’. This is calculated by adding up all your taxable income and taking off any tax reliefs. This is then ‘adjusted’ by subtracting 125% of the value of both any Gift Aid donations you made, and of any private pension contributions you made where your pension provider gives you tax relief at source.

3 and 4-year-olds from households of any income will qualify for 15 hours of free childcare per week. However, if your adjusted net income is over £100,000, you are no longer eligible for the extended scheme of 30 free childcare hours.

 

Earning above £100,000 will also disqualify you for the Tax-Free Childcare scheme. We cover the scheme in this post. In short, this scheme allows parents to get up to £2,000 of government support per child to spend on childcare.

Earning above this threshold will also most almost always disqualify you from the 15 hours of free childcare available to 2-year-olds. This is because this free childcare is only available to those receiving certain government benefits, such as Income Support or Universal Credit.

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About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.