Nearly 100,000 children are lacking out on childcare assist resulting from ‘cliff edge’ rule
Up to 30 hours free childcare a week is available to some children depending on your household income and the age of your child – but thousands of parents are missing out
Free childcare hours are available to eligible parents(Image: Getty Images)
Up to 99,000 children are missing out on childcare support as working parents are being frozen out due to a “cliff edge” earnings threshold.
Eligible working parents can get up to 30 hours free childcare a week. If your child is three or four years old, you can claim 15 hours a week of free childcare, regardless of your income.
However, families do not qualify for the full 30 hours a week if either parent has an adjusted net income above £100,000. It means in theory, a family where each parent earns £99,000, giving them a household income of £198,000, would qualify – but a family where one parent earns £101,000 and the other is out of work, would not get the extra help.
New estimates from the Department for Education (DfE), obtained by Quilter through a Freedom of Information Act, reveal that between 50,500 and 99,000 children were affected by the £100,000 earnings limit in 2025/26.
The DfE suggests the value of funded childcare support unavailable to these families was up to £874million. The figures are massively up compared to 2018/19 when between 10,900 and 22,500 families were affected.
The increase reflects more people being able to access free childcare, after the scheme was expanded to include children aged nine months to two years.
Ian Futcher, financial planner at Quilter, said this means a relatively modest pay rise, promotion or bonus can result in a family losing access to childcare support worth thousands of pounds a year.
Analysis using the Bank of England inflation calculator using CPI found that if the childcare threshold had risen broadly in line with inflation since its introduction, it would now stand at around £137,000.
Mr Futcher said: “These figures demonstrate how a threshold that once affected a relatively small number of families is now having a much wider impact.
“While £100,000 is still a high income, it is not worth what it was when this threshold was set. As earnings and childcare costs have risen, more families are finding themselves caught by rules that were designed in a different economic environment.”
But there are ways for families to ensure they remain eligible for free childcare hours. For example, Quilter suggests you could increase your pension contributions or use salary sacrifice, as the eligibility for free childcare hours is based on your adjusted net income.
Salary sacrifice is where you agree to give up part of your pre-tax salary for a non-cash benefit, such as payments into a pension scheme.
Mr Futcher added: “The good news is that there are often planning opportunities available. Eligibility is based on adjusted net income, so pension contributions can be particularly effective.
“Not only can they help improve long-term retirement outcomes, but they may also help preserve access to valuable childcare support and other tax allowances. Given the sums involved, understanding these thresholds can make a significant difference to family finances.”
The Mirror has contacted the DfE for comment.
