Keep Tax-Free Childcare and funded hours — the 90-day job

You have the code in place. The live risk is the login, a tax year that finishes over £100,000, or a nursery that never re-checks the code.

This page is for families who already have an 11-digit working-parent code. You are not picking a first term. You are keeping the one you have.

Every three months HMRC asks you to sign in and confirm you still pass. Miss that login and Tax-Free Childcare goes pay-only the same day — there is no TFC grace period. Funded hours can run on for a short grace window if the place is already running, then they stop.

The test you confirm is expected adjusted net income for the whole tax year, not this quarter scaled up. If you do not have a code yet, open Don’t miss the first funded term. If HMRC has already said no, open Childcare Service said no.

Diary the date in the account

The code is not annual. Sign in every three months. HMRC texts are a backup. The date that matters is the one in the account. Do it in the first few days of the window, not on the last evening.

If you miss it: Tax-Free Childcare stops the top-up the same day. Funded hours can continue for a short grace window if a place is already running. Then they stop. You generally cannot start a new working-parent place in a grace period.

Reconfirm on the tax year, not this quarter

Each time you confirm, you are saying you do not expect adjusted net income over £100,000 in the tax year the declaration falls in — 6 April to 5 April.

Scaling up year-to-date pay as if every month looks like this one is not the test. A March personal pension or Gift Aid can count if it is a qualifying payment, will clear by 5 April, and is already arranged.

If After adjusted net income is still over £100,000, stop declaring you are under. Do not tick “nothing has changed” because last quarter was fine.

The four household outcomes for extra pension versus cash sit in the table on Don’t miss the first funded term — part 2.

Two tests still apply

The full ingredients list for the £100,000 figure is on The £100k childcare cliff.

The floor is usually 16 hours a week at National Living / Minimum Wage from work over the next three months. Current GOV.UK figure for 21+ is £2,643.68 before tax. Dividends, interest, rent and pension payments do not count for the floor. They can still sit in the cap.

A partner who lives with you must stay on the account. A new partner moving in can kill the code even if your figures never changed.

Grace is not a plan — it is a landing mat

Grace exists only for working-parent funded hours, and only if the child already has a place the local authority is funding. Tax-Free Childcare has no grace period.

Code becomes invalid	Grace ends
1 January – 10 February	31 March
11 February – 31 March	31 August
1 April – 26 May	31 August
27 May – 31 August	31 December
1 September – 21 October	31 December
22 October – 31 December	31 March

Same day you know the code is in trouble: screenshot the account, phone the nursery, ask them to validate grace-end on ECS.

Stay compliant without over-sharing

Before each login, update the workbook for 6 April to 5 April and save a dated copy. You do not attach that to a routine “nothing has changed” reconfirm. You keep it so that if HMRC asks, you are not reconstructing March from memory.

FAQs

What if I need more than the £60,000 pension annual allowance?

The £60,000 cap is you + employer + salary sacrifice. Carry-forward may exist. Money-purchase annual allowance is usually £10,000 if you have flexibly accessed a pot.

Can I ride the grace period until March and sort the pension then?

No. A grace period is a landing mat on a place that is already running. Tax-Free Childcare has no grace period.

Where is the £100,000 figure explained?

On The £100k childcare cliff (England).