10/06/2026
Someone once described crossing £100,000 as "the pay rise that costs you money." For parents of young children especially, that's not as dramatic as it sounds.
Here's what actually happens.
For every £2 you earn above £100,000, you lose £1 of your tax-free personal allowance. By £125,140, it's gone entirely. So on a £10,000 pay rise that takes you from £100k to £110k, you'd keep around £4,000 of it. Less if you factor in National Insurance.
Then there's childcare. Once one partner earns over £100,000, the household loses access to tax-free childcare (worth up to £2,000 per child per year) and the funded free hours scheme entirely. The funded 30 hours a week could otherwise cost you between £65 and £200 to replace - that's up to £10,400 a year in nursery fees. For parents with two children under five, the total childcare support lost could be around £20,000.
The threshold applies per parent, not per household. Two parents each earning £99,000 keep full entitlement. One parent earning £100,001 loses it entirely.
And if you were already earning above £80,000, child benefit has gone too as it's fully withdrawn at £80,000 under the High Income Child Benefit Charge.
The good news is that pension contributions reduce your adjusted net income - the figure used to test eligibility for all of these thresholds - so with some planning, it's often possible to bring that number back below £100,000 and recover what you'd otherwise lose.
A pay rise to six figures is still worth having. But the number on your offer letter and what you actually gain can look very different without some forward planning first.
If you're approaching this threshold - or a bonus might take you over it - it's worth a conversation before the tax year ends. Drop us a message.
