TFC11050 - Adjusted net income: adjusted net income overview

Childcare Payments Act 2014, section 10  

Childcare Payments (Eligibility) Regulations 2015, regulation 15(1)  

A person must not expect their adjusted net income to exceed £100,000 in the tax year in which the declaration of eligibility falls.   

  

Childcare Payments (Eligibility) Regulations 2015, regulation 15(4)  

Adjusted net income has the meaning given in section 58(1) of the Income Tax Act 2007 and is not the same as gross income, net income, or income from earnings.  

Example:  

Jayne makes a declaration of eligibility to TFC on 1 May 2018. She estimates her gross taxable income will be £115,000 in the tax year ending 5 April 2019. This is made up of £85,000 income from employment and £30,000 income from investment property.   

 Jayne expects to make a private pension contribution without tax relief of £10,000. Jayne does not expect to make any further adjustments to her gross taxable income, so her net income is (£115,000 - £10,000) £105,000. This is the income figure that will be used to calculate Jayne’s adjusted net income.  

 Jayne expects to make a Gift Aid donation of £10,000. She can take £12,500 off her net income, £10,000 plus £2,500, the value of the basic rate tax.  

 Jayne’s adjusted net income is (£105,000 - £12,000) £93,000. Therefore, at the time of submitting her declaration of eligibility to TFC, Jayne expected her adjusted net income to fall below £100,000 in the tax year ending 5 April 2019.