HMRC tax threshold alert could affect free childcare

HMRC estimates obtained by Rathbones say more than two million people will earn over £100,000 in 2026–27, and a government freeze on income tax thresholds until 2031 is reported to push more workers into that threshold.

HMRC estimates obtained by Rathbones indicate the number of UK workers earning more than £100,000 is expected to top two million in the 2026–27 tax year. The change follows the government's decision to freeze income tax thresholds until 2031. Media and official reporting have highlighted potential effects on marginal tax rates and benefits. Reported details: - HMRC estimates obtained by Rathbones project over two million people will earn more than £100,000 in 2026–27, roughly 6% of a 34 million workforce. - The government has frozen income tax thresholds until 2031, a policy reported as intended to raise revenue during this Parliament. - The Office for Budget Responsibility and media coverage reported that the freeze could expose some earners to higher marginal rates and the loss of benefits, including free childcare. Summary: The reported effect is that more workers will be subject to the £100,000 threshold and some households are reported to face higher tax rates and potential loss of benefits such as free childcare. Undetermined at this time.