Find the line, then find out how far you are from the right side of it.
The rule is brutal and simple. If either parent’s adjusted net income goes over £100,000, the household loses the working-parent free hours and Tax-Free Childcare at the next three-monthly reconfirmation. Not tapered, not reduced: gone, on the first pound over (three- and four-year-olds keep the universal 15 hours whatever the parents earn). For a family paying nursery fees the loss can be larger than the pay rise that caused it, which is why people who have just been promoted find themselves asking a question nobody warned them about.
What the line is measured on
Not your salary. Adjusted net income: salary plus bonus, taxable benefits such as a company car or medical cover, rental profit, and all taxable interest and dividends (the savings and dividend allowances are 0% bands, not exemptions, so that income still counts; ISA income does not), less pension contributions made from gross pay and, grossed up, any relief-at-source contributions and Gift Aid. That last part is the whole reason this page exists. A salary of £108,400 with £8,400 going into a pension by salary sacrifice is an adjusted net income of exactly £100,000, which is on the right side of the line, provided nothing else counts and the other parent is under it too.
What this tool does that a tax calculator will not
It works backwards. Every calculator can tell you your tax at £108,400. This one tells you how far over the line you are, the smallest contribution that puts you under it, and what that costs you in take-home, which is much less than the contribution itself because the Personal Allowance taper starts at the same £100,000 and the effective 60% income tax rate between £100,000 and £125,140 (62% once National Insurance is counted, which is the figure the tool shows) does not apply to any pound moved. If you know what the childcare support is worth to your household, put that in too and the three numbers sit side by side. The page does not tell you what to do with them.
Arithmetic about the rules, not advice. It does not know your circumstances, and a payslip can differ by a few pounds through rounding and tax codes.
- What brings adjusted net income to the line
- £8,400 a year more going in by salary sacrifice
- What that costs in take-home
- £3,192 a year
- Per pound into the pension
- 38p of take-home given up
- Your next £1,000, in the trap
- 62.0% goes in deductions and lost allowance; you keep £380 of it
The £8,400 is not lost: it goes into a pension, where it is invested, can fall in value, and cannot normally be touched until the minimum pension age (55 now, 57 from April 2028). Whether that is worth doing turns on things this page cannot see: what the support is actually worth to your household, whether your employer offers salary sacrifice, whether there is room under the pension annual allowance, and whether you can do without the pay now. It is not a question a calculator can answer.
Show the working
| Line | On | Rate | Amount | Running |
|---|---|---|---|---|
| Gross salary | £108,400.00 | £108,400.00 | ||
| Personal Allowance, after the taper | £8,370.00 tax-free | |||
| Basic rate | £37,700.00 | 20% | −£7,540.00 | £100,860.00 |
| Higher rate | £62,330.00 | 40% | −£24,932.00 | £75,928.00 |
| National Insurance, main rate | £37,700.00 | 8% | −£3,016.00 | £72,912.00 |
| National Insurance, above the upper earnings limit | £58,130.00 | 2% | −£1,162.60 | £71,749.40 |
| Contribution that brings adjusted net income to the line | £8,400.00 | |||
| Take-home given up | −£3,192.00 |
Every amount is rounded to the nearest £500 in the link. This page sends nothing you type anywhere; the link exists only if you copy it.
What this is, and what it is not
It is arithmetic about the 2026/27 rules for employment income under PAYE, with every figure it used listed under the result and the date it was last read against its source. The £100,000 threshold itself is not in that list because it is an eligibility rule rather than a tax figure: it is published on GOV.UK’s childcare eligibility page, which is listed under the result with the date it was read. It is not advice. It does not know whether your employer offers salary sacrifice, whether your pension has room under the annual allowance, or what a year of contributions means for the rest of your plans. If the amount involved is large, that is a conversation with a regulated adviser (the FCA Register lists them) or, free, with MoneyHelper. For how the sum behind this works line by line on an ordinary salary, start with where your salary actually goes.
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