HMRC warning to people who have had a £2,000 pay rise in recent years

Conservative Party government, who were in power until July, introduced measures on September 1 to provide 15 hours of free weekly childcare.

Parents could lose £20,000 each thanks to a "warped" change from HMRC, according to critics. The Conservative Party government, who were in power until July, introduced measures on September 1 to provide 15 hours of free weekly childcare.

But families where one parent earns more than £100,000 are excluded from this support under HMRC rules. It means high-earning parents in the UK are set to lose out on over £20,000 of childcare support annually due to recent government changes, according to new data.

A family with one high-earning parent and two children under two could lose £20,000 worth of childcare support annually from next academic year, compared to a middle-income family with a main earner on £60,000.

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Charlene Young, savings expert at AJ Bell, said: "Whilst many working parents will welcome the latest extension of funded childcare hours, a distortion in the tax system means that the cliff-edge for high earning parents will worsen."

Ms Young said: "Under the current rules a family with two children aged one and two - where the breadwinner earns £99,000 but gets awarded a bonus of £2,000 - would be classed by the Government as earning an adjusted net income of £101,000."

Ms Young had a warning for people who had had pay rises - explaining it could cost them "£10,000". "Due to the warped rules, this £2,000 pay rise ends up costing them nearly £10,000, an effective tax rate of almost 500pc," Ms Young explained. She added that a salary would need to increase to £126,624 to match the disposable income of someone earning £99,000, creating a situation where parents are "effectively worse off earning between £100,000 and £127,000."

"If you are the parent in that example, paying in just £800 to a pension would lower your adjusted net income by £1,000. That's £800 plus automatic basic rate tax relief, which gets you back £11,520 and tops up your pension pot by £1,000 too," she explained.

A Department for Education spokesman said: "Quality early education has been unavailable or unaffordable for too long. It's often the most disadvantaged families that miss out. Fixing this is a major government priority."