The Conservative Party has committed to removing the £100,000 income ceiling that currently disqualifies parents from accessing government-funded childcare support in England, describing the existing system as an "absurd cliff edge" that penalises earning more.
Under present rules, families where either parent earns above £100,000 annually lose eligibility for both the 30-hour free childcare entitlement and the government's tax-free childcare scheme.
"What we want to see is that people who work harder don't get punished for doing so,"Conservative leader Kemi Badenoch stated during an appearance on the BBC's Sunday with Laura Kuenssberg programme.
The announcement was made as Conservative members convened for the party's annual conference in Birmingham. Shadow chancellor Andrew Griffith is scheduled to address the conference on Monday, 5 October 2026, with tax incentives and work incentives expected to feature prominently in his remarks.
How does the current childcare system work?
Since September 2025, eligible working parents in England have accessed 30 hours of free childcare weekly for children aged nine months to four years. However, both parents must earn below the £100,000 threshold to qualify. For children aged three and four, parents exceeding the limit can still receive the universal 15 funded hours, with the working-parent entitlement falling from 30 hours to 15.
The tax-free childcare scheme operates separately, allowing parents to deposit funds into an online account where the government contributes £2 for every £8 deposited, up to £2,000 per child annually. The £100,000 limit is calculated based on each parent's adjusted net income rather than combined household income.
Why is the threshold considered problematic?
Economists have criticised the £100,000 threshold for creating a perverse incentive structure where parents can find themselves financially worse off after receiving a substantial pay rise. Research by Centax estimated that nearly 12,000 parents deliberately keep their income below the threshold to retain childcare support.
The Conservatives contend that the threshold may discourage family formation, with some individuals delaying parenthood or deciding against having children until their income circumstances change.
"What we want to see is more people in work and not taking the wrong decisions or the wrong choices, and it doesn't matter whether they're earning £10,000 or £100,000 - what matters is that people are out there working,"Badenoch told the BBC.
When pressed on whether high earners, including those on £1 million annually, would receive free childcare under a Conservative government, Badenoch responded:
"It doesn't matter what you earn - we don't want you to be punished for working hard. What we're trying to do is grow our economy."
What is the Conservative proposal?
The party intends to eliminate the £100,000 threshold entirely, allowing parents at all income levels to access childcare support without losing eligibility due to earnings. The Conservatives frame this as both pro-family and pro-growth policy, arguing that increased work incentives will stimulate economic expansion.
The proposal also addresses what the party describes as the "unfairness" of calculating the threshold on individual earner income rather than household income. The Conservatives stated the proposal would cost approximately £700 million annually and be funded by reducing the number of public servants working in non-departmental public bodies, which the party said would save about £1.6 billion by 2030.
Shadow chancellor Andrew Griffith stated:
"Removing this childcare cliff edge is the first step in our mission to deliver lower, simpler, and fairer taxes across the board."The party indicated this represents the opening move in broader efforts to reform the tax system to strengthen incentives for work and investment.
What is the historical context?
The £100,000 cap was introduced in 2017 and has remained unchanged since, with the childcare offer later expanded in stages, reaching 30 hours for eligible children from nine months old in September 2025. The threshold has persisted through successive governments despite growing criticism from economists and families affected by the policy.
In March 2026, Education Secretary Bridget Phillipson indicated that eligibility thresholds, including the cap, were being examined as part of a wider childcare review, though officials stated that changes were not expected immediately at that time.
What happens next?
The Conservative Party is expected to use its annual conference to unveil additional elements of its policy agenda ahead of the next general election. The party, currently polling behind both Labour and Reform UK, has positioned the conference as an opportunity to demonstrate that it represents a new direction following its defeat in the 2024 general election. Badenoch arrived in Birmingham on Saturday and vowed the party was fundamentally reformed from the one that lost power.
Key Facts:
- The Conservative proposal would eliminate the £100,000 income threshold for childcare support eligibility
- The policy is estimated to cost £700 million annually, funded by reducing public servants in non-departmental public bodies
- Nearly 12,000 parents currently keep their income deliberately below the threshold to retain childcare support
- The threshold has remained unchanged since its introduction in 2017
- Shadow chancellor Andrew Griffith will present tax reform details at the Conservative conference on Monday, 5 October 2026
