Bonus pushed you over the £100k childcare limit?

A bonus belongs in the annual income estimate

A bonus can move adjusted net income over the childcare limit even when basic salary has not changed. Enter it in the bonus field, rather than replacing your salary with a take-home figure. Then add taxable benefits and other income and subtract the pension contributions already counted for the year. The excess is the remaining ANI above the limit, not automatically the whole bonus.

The distinction matters if you already make regular pension contributions. A percentage pension entry in this calculator is a percentage of salary. It is not silently applied to the bonus. If a bonus has its own pension arrangement, enter the actual annual amount in the relevant pension category. That keeps the income and deduction visible and avoids counting the same reduction twice.

Two routes to compare before choosing

You can compare sacrificing the bonus with paying cash into a personal pension or SIPP before the tax-year deadline. Salary sacrifice and a SIPP have different upfront cash flows. A SIPP payment is grossed up by the provider; any further tax refund is separate. Use the route table to compare the same gross ANI reduction, then check the arrangement with payroll or the provider rather than assuming the cash amounts are interchangeable.

Keep an updated household estimate

A bonus estimate can change. Revisit the annual figures if the award differs from what you expected or if another taxable benefit appears. Add the partner’s figures separately. Restoring your own ANI to the limit does not fix a partner who remains over it, and a childcare comparison should not describe the support as protected in that situation.

Build the annual estimate before choosing a route

Use gross salary before any salary sacrifice. Add bonus, taxable benefits and full other income, including savings interest, dividends and rental profit covered by allowances. Then enter each existing pension contribution in its correct category. Salary sacrifice and net pay entries are gross amounts. Personal pension cash is the amount actually paid before the provider adds relief. Gift Aid cash is grossed up separately. These distinctions can change the remaining excess substantially, even when the headline salary is the same. Keep a record of the inputs and the assumptions so you can revisit them when circumstances change.

Check the partner independently rather than combining incomes or transferring one parent’s excess to the other. The upper income limit is an each-parent rule, and a minimum income condition also applies. A contribution calculated for one parent cannot establish eligibility for a household whose partner remains over the limit. If the result flags a partner or minimum income issue, resolve that question before treating the childcare amount as protected.

Read value at stake as an estimate, not a cash award

Children have different free-hours values. In England, eligible children from nine months to two years risk all working-parent hours, while children aged three to four retain universal hours. School-age children and children under nine months have no free-hours value in this model. Outside England it counts Tax-Free Childcare only because national free-hours rules differ. The hourly value is an editable planning assumption, so check it against the childcare you would otherwise pay for.

Add paid childcare excluding free hours if you want a bill-based Tax-Free Childcare estimate. A blank bill uses the annual cap and makes the result an up-to value. Entering zero means there is no paid childcare to value. Neither a cap nor an hourly valuation guarantees a place, a payment or full eligibility. The useful comparison is the support this contribution could protect against its estimated final cost, while keeping the pension added visible as a separate amount.

Separate today’s cash from pension savings

The same gross pension addition can have different cash flows across salary sacrifice, workplace net pay and a personal pension or SIPP. The route table separates pay or cash given up, provider top-up, any further Self Assessment refund and final cost. Tax relief is the difference between the engine’s income tax calculation before and after the contribution. It is not a fixed assumption that every contribution costs the same proportion of its gross value.

SIPP payments must be made by 5 April to count for this tax year. Check timing with the provider. The final cost may be lower than the cash needed upfront because relief and refunds do not all arrive together. If the estimated net cash gain is negative, the pension route may not pay in cash terms. A larger excess or other income is a reason to discuss the wider position with an adviser rather than choosing from a headline alone.

Questions about this guide

Sources and assumptions

Each rule has a source and checked date. Editable values, examples and product warning margins are labelled assumptions. Confirm individual eligibility with official guidance.

• tax: https://www.gov.uk/government/publications/rates-and-allowances-income-tax/income-tax-rates-and-allowances-current-and-past
• ani: https://www.gov.uk/guidance/adjusted-net-income
• hours: https://www.gov.uk/free-childcare-if-working/what-youll-get
• eligibility: https://www.gov.uk/tax-free-childcare/check-if-youre-eligible
• tfc: https://www.gov.uk/tax-free-childcare
• ni: https://www.gov.uk/national-insurance-rates-letters
• cap: https://www.gov.uk/government/publications/changes-to-salary-sacrifice-for-pensions-from-april-2029/changes-to-salary-sacrifice-for-pensions-from-april-2029
• pledge: https://www.itv.com/news/2026-10-03/tories-pledge-to-end-100000-childcare-cliff-edge-on-eve-of-conference