Adjusted net income calculator: get under £100,000
HMRC tests adjusted net income against £100,000 to decide whether you keep your full tax-free allowance, Tax-Free Childcare and the 30 funded hours. It is your taxable income minus some pension payments and Gift Aid, so you can lower it. Enter your figures to see where you stand and what it would cost to get under.
Your adjusted net income is
Ways to get under £100,000
| Route | You pay or give up | Reaches your pension or charity | Cost to your take-home | Cost for each £1 taken off your income |
|---|
Cost is the fall in take-home pay after income tax and National Insurance, including the allowance you get back. Higher-rate relief on a personal pension or Gift Aid arrives through your tax code or a self assessment refund, not straight away.
- What it costs you
- What you keep
- Where you end up
What each extra pension payment does to your money
Per year, by extra pension payment taken from your gross pay
Show the numbers as a table
| Extra payment | Adjusted net income | Take-home pay | Support kept | Take-home plus support |
|---|
- Plan for the whole tax yearAdjusted net income is for 6 April to 5 April. Childcare eligibility uses the income you expect this year and is rechecked every three months, so a bonus later in the year can undo your planning.
- Childcare help has more conditionsFunded hours and Tax-Free Childcare also need each parent to be working, earning at least 16 hours a week at minimum wage, with a lone parent counting alone. Funded hours start at 9 months and are for England, while Scotland, Wales and Northern Ireland have their own schemes. Tax-Free Childcare is for children under 12, and you cannot claim it alongside Universal Credit childcare or childcare vouchers. Your provider sets the hourly rate you would otherwise pay, so use theirs.
- Both parents countEach parent’s adjusted net income is tested on its own against £100,000. Two people on £90,000 both qualify. One on £101,000 and one on £40,000 do not.
- Company pension contributionsMoney your employer adds on top of your salary is not your income, so it cannot lower adjusted net income. Only a salary sacrifice, where you swap pay for a contribution, does. Ask your employer whether they offer one.
- The annual allowanceEverything paid into your pension, from you, your employer and the tax relief, counts towards £60,000 a year. It falls if your income is above £200,000. You may be able to carry forward unused allowance from the last three years.
- Pension money is lockedYou cannot draw on it until at least age 55, rising to 57 from April 2028. Getting under £100,000 this way moves money to your future self.
- Salary sacrifice changes in 2029From April 2029 only the first £2,000 a year of pension salary sacrifice will be free of National Insurance. Nothing changes for 2026/27.
- What this leaves outThe tax estimate treats other income as ordinary pay, so dividends and savings interest, which have their own rates, are only approximate. The adjusted net income figure follows HMRC’s steps but leaves out less common items such as trading losses. This is an illustration, not tax advice.
What adjusted net income means
HMRC uses adjusted net income to decide whether you keep your full personal allowance and certain family support. It is your taxable income for the tax year, minus Gift Aid donations and personal pension payments made with tax relief at source, each grossed up to include the tax relief.
Pay you give up through salary sacrifice, or pension contributions taken from gross pay under a net pay arrangement, reduce your taxable pay before this calculation starts. Money your employer adds on top of your salary does not lower it.
The £100,000 line matters for three reasons. Above it your personal allowance shrinks by £1 for every £2. You lose Tax-Free Childcare and the 30 funded hours if either parent is over it. And between £60,000 and £80,000 the High Income Child Benefit Charge takes back Child Benefit, so reducing adjusted net income can also reduce that charge.
Common questions
What is adjusted net income?
Adjusted net income is your taxable income for the year before the personal allowance, minus the grossed-up value of Gift Aid donations and personal pension contributions paid with tax relief at source. It is not the same as your salary.
How do I reduce my adjusted net income?
The main routes are salary sacrifice into your pension, a net pay pension arrangement, a personal pension paid with tax relief at source, Gift Aid donations, and other salary sacrifice such as cycle to work or an electric car scheme. The calculator shows what each costs in take-home pay.
Do employer pension contributions reduce adjusted net income?
Not if your employer pays them on top of your salary. That money is not part of your taxable pay, so it does not lower the figure. Only a salary sacrifice, where you swap pay for a pension contribution, does. Ask your employer whether they offer one.
What do I lose if my adjusted net income is over £100,000 and I have children?
You lose Tax-Free Childcare, which adds 20% to childcare costs up to £10,000 a child a year, so up to £2,000 per child. In England you also lose the 30 funded hours for children from 9 months to 2, and 15 of the 30 hours for children aged 3 and 4. The 15 universal hours stay. Child Benefit may also be charged back.
How does the calculator work out what childcare really costs?
It starts from your fees before any help. Funded hours come off first, valued at your provider’s hourly rate and never by more than your fees. Tax-Free Childcare then adds 20p for every 80p you pay on what is left, up to £2,000 a child a year. What remains is what you pay. Over £100,000 the funded hours drop to 15 for 3 and 4 year olds and nothing for younger children, and the top-up goes, so the same fees cost you more. The table shows both figures side by side. Funded hours also depend on how many hours your child actually attends, so if your child uses fewer than 30 hours a week, check your invoice.
Is the £100,000 limit for the household or for each parent?
It applies to each parent separately. Two parents each on £90,000 both qualify. If one parent is over £100,000, the family loses Tax-Free Childcare and funded hours even if the other earns far less.
Can I take the money back out of my pension?
Not before the minimum pension age, which is 55 and rises to 57 in April 2028. Getting under £100,000 through a pension moves money to your future self rather than spending it.