Families with young children lose roughly £30,000 in financial support once either parent earns more than £100,000 a year, according to the investment platform AJ Bell. The threshold creates what experts call a 'cliff-edge' because support is withdrawn abruptly rather than gradually. Sean McCann, a chartered financial planner at NFU Mutual, said the six-figure threshold "does come with an unexpected sting in the tail" for those with small children.
High earners face a punitive tax rate on income above the £100,000 mark. The tax-free personal allowance starts to disappear once earnings exceed this level, with individuals losing £1 of their annual £12,570 allowance for every £2 earned over the threshold. This creates an effective tax rate of 60% on earnings between £100,000 and £125,140. When national insurance is added, McCann explained, earners "only keep £38 of every £100 earned" in this income band. An estimated 800,000 people face this situation, according to a freedom of information request obtained by NFU Mutual.
In England, the problem is compounded by the loss of government childcare support. Parents lose access to three separate entitlements once adjusted net income exceeds £100,000: tax-free childcare worth up to £2,000 per child annually; 30 hours of funded term-time childcare for children aged nine months to three years; and child benefit, which is clawed back through the high-income child benefit charge. AJ Bell's analysis, based on a family with a nine-month-old baby and a two-year-old, valued these three elements at £4,000, £23,872 and £2,337 respectively. Sarah Coles, the platform's head of personal finance, said parents "lose a big chunk" of support immediately: "It isn't tapered away gradually, hence the 'cliff-edge' moniker."
The number of children affected by this threshold has increased significantly. Between 50,500 and 99,000 children missed out on funded childcare in 2025-26 because a parent exceeded the income threshold, according to freedom of information figures obtained by wealth management firm Quilter. This represents a sharp rise from two years earlier, when the figure was estimated at between 15,600 and 30,800 children.
For higher-income families in England with young children, crossing the £100,000 earnings threshold means both a dramatic increase in tax liability and the simultaneous loss of childcare support entitlements that most other families retain.