Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether his Department has made or commissioned a quantitative analysis of the potential behavioural and economic impact of the level of the personal allowance taper and access to Tax Free Childcare and free childcare for people earning above £100,000.

Within the personal tax system, withdrawal of the Personal Allowance affects those with income over £100,000 a year. This was introduced in 2010/11 and occurs gradually, with £1 of allowance lost for every £2 of income above the income limit of £100,000. This reduction continues until the Personal Allowance is completely withdrawn for those with incomes above £125,140.

The Government recognises that because of this, taxpayers with incomes within the taper band face a higher marginal tax rate, and that it introduces some complexity into the tax system. However, removing this would be expensive and regressive.

Further, the Government recognises that childcare is a significant expense for many families, and we remain committed to ensuring that parents can access affordable, high quality provision that supports them to work and provide for their children. The offer targets parents for whom childcare support makes the biggest difference to their ability to work, as childcare costs account for a bigger proportion of their earnings.

At Autumn Budget 2025, the Government announced that the Department for Education will lead a review of childcare provision. The aim of this review is to simplify the system for both providers and families, making it easier to access support and enhancing the overall impact of the Government’s childcare offer.