When more is less · UK study
We calculated the £100k childcare cliff for every family size. A parent of three faces a 561% tax rate.
Cross £100,000 with young children and you lose free childcare hours and Tax-Free Childcare overnight, on top of the 60% tax band. We computed the real marginal rate for one, two and three children — and it climbs past 800% in London.
The £100,000 threshold is famous for the 60% tax trap. For parents, it's far worse — because crossing it also destroys free childcare hours and Tax-Free Childcare, all at once. We took a parent earning £100,000 who accepts a rise to £106,000, and computed what they actually gain once lost childcare is counted. They gain £2,280 in take-home — and lose far more.
The real marginal rate by family size
| Children in childcare | Childcare support lost | Real gain from the £6k rise | Effective marginal rate |
|---|---|---|---|
| 1 child | £9,980 | −£7,700 | 228% |
| 2 children | £19,960 | −£17,680 | 395% |
| 3 children | £29,940 | −£27,660 | 561% |
Every row is a family made worse off by a pay rise. A parent of three loses nearly £28,000 of support to gain £2,280 of pay — an effective marginal rate of 561%. In a high-cost area like London, where funded hours are worth far more, the same family's rate climbs past 800%. These figures use average England childcare costs; the effect is a cliff, not a taper, so it strikes the instant adjusted net income passes £100,000.
The fix is almost always a pension contribution to stay under £100,000 — and because the cliff is so steep, it pays for itself many times over. Work out your own exact position with the childcare cliff calculator.
All figures computed from published HMRC tax rules for the 2026/27 tax year, using the same engine behind our calculators, and verified 12 August 2026. Reproducible and free to cite — contact us for the underlying data.