30 Hours Free Childcare: A Guide for High Earning Parents

If your child is aged 9 months to 4 years, you may be eligible for up to 30 hours of free childcare per week for 38 weeks a year under the Free Childcare for Working Parents scheme.

1. How Does Eligibility Work?

The amount of free childcare you can receive depends on several factors, including:

• Your child’s age and individual circumstances
• Your employment status (employed, self-employed, or company director)
• Your income (and your partner’s income, if applicable)
• Your immigration status

You will not qualify for free childcare if:

You or your partner have an adjusted net income over £100,000 in the current tax year

Your child does not normally live with you.

In addition to the above you may also be able to claim this benefit if you’re working on leave or not currently working but claiming certain benefits such as: Incapacity Benefit, Severe Disablement Allowance,  Carer’s Allowance,  Limited Capability for Work Benefit & contribution-based Employment and Support Allowance.

In addition to this you must also expect to earn a minimum income over the next three months from the date of application.

2. How Is Adjusted Net Income Calculated?

Many working parents in England are surprised to discover that earning “too much” can mean losing entitlement to 30 hours free childcare. This usually happens because their adjusted net income goes over the government’s upper limit.

Step 1: Start With Your Total Taxable Income

Begin with your total taxable income for the tax year, which may include:

• Salary and wages
• Bonuses and commissions
• Self-employed profits
• Rental income
• Dividends
• Interest from savings
• Taxable benefits (such as company cars or private medical insurance)

This is broader than just your payslip salary and is where many parents underestimate their income.

Step 2: Subtract Certain Allowable Deductions

From your total income, subtract specific tax-relievable payments, including:

• Gross pension contributions (including salary sacrifice and personal pensions)
• Gift Aid donations (grossed up to their pre-tax value)
• Trading losses or certain allowable business expenses

These deductions can significantly reduce your adjusted net income and may help bring it back below the £100,000 threshold.

After subtracting allowable deductions (but not personal allowance), the resulting figure is your adjusted net income.

3. How Can I Reclaim This Benefit?

30 hours free childcare can often be reclaimed through smart planning & utilising the following tools at our disposal:

Splitting income between a couple: Where possible, balancing income between partners can help ensure neither exceeds the HMRC threshold, reducing one person’s adjusted net income and supporting eligibility for 30 hours free childcare.

Pension contributions: Making personal or workplace pension contributions is one of the most effective ways to lower adjusted net income, as pension payments are deducted before HMRC assesses childcare eligibility.

Salary sacrifice schemes: Using salary sacrifice for benefits such as pensions, childcare vouchers (where available), or electric vehicles can reduce taxable pay and adjusted net income in a compliant and HMRC-approved way.

Charitable giving: Donations made through Gift Aid can also reduce adjusted net income, as HMRC allows the grossed-up value of charitable contributions to be deducted when assessing eligibility.

Bonus tip: Eligibility for 30 hours free childcare is based on your expected income for the current tax year, not the previous year’s earnings. HMRC defines “expected income” as what you reasonably anticipate earning, taking into account what is known at the time. While your estimate can change during the year, it is reviewed through quarterly declarations. Importantly, large commissions, bonuses, or promotions are not guaranteed and may not need to be included if they are genuinely uncertain at the point you make your declaration.