Up to 99,000 children are being left without childcare assistance as working parents face exclusion due to a sharp earnings threshold barrier.
Families with eligible working parents can access up to 30 hours of free childcare per week. For children aged three or four, regardless of income, parents can claim 15 hours of free childcare weekly.
However, families do not qualify for the full 30 hours if either parent’s adjusted net income exceeds £100,000. This means that a family with each parent earning £99,000, totaling £198,000 in household income, would be eligible, while a family with one parent earning £101,000 and the other unemployed would not receive additional support.
New estimates from the Department for Education (DfE), obtained via a Freedom of Information Act request by Quilter, indicate that between 50,500 and 99,000 children were impacted by the £100,000 earnings cap in 2025/26.
The DfE estimates that the value of inaccessible funded childcare support for these families could amount to £874 million. These figures represent a substantial increase compared to 2018/19 when between 10,900 and 22,500 families were affected.
The rise in numbers can be attributed to more individuals gaining access to free childcare, following the expansion of the scheme to include children aged nine months to two years.
Ian Futcher, a financial planner at Quilter, highlighted that even a modest salary increase, promotion, or bonus could lead to families losing childcare support worth thousands annually.
An analysis using the Bank of England inflation calculator shows that if the childcare threshold had kept pace with inflation since its inception, it would now be approximately £137,000.
To maintain eligibility for free childcare hours, families can consider increasing pension contributions or utilizing salary sacrifice, as eligibility is dependent on adjusted net income.
Salary sacrifice involves agreeing to forgo a portion of pre-tax salary for non-cash benefits, such as contributions to a pension scheme.
Mr. Futcher emphasized the availability of planning opportunities, with pension contributions being particularly effective for maintaining eligibility for childcare support and tax allowances.
The Mirror has reached out to the DfE for comment.
