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Background Childhood poverty adversely affects child development. School readiness may determine later outcomes, yet causal evidence on income interventions to improve this remains limited. This study quantifies the effect of household poverty reduction on school readiness using a target trial emulation.Methods We analyzed 13,055 children in the UK Millennium Cohort Study, followed from 9 months to 5 years. Our treatment exposure was weekly household income. School readiness at 5 years was assessed across personal–social–emotional, language and communication, cognitive, and physical development domains using standardized assessments or parent-report on questionnaires. We used parametric G-formula to simulate a hypothetical income supplement of £217 per week lifting families out of poverty at each follow-up point, adjusting for confounders. Relative changes in school readiness compared to no intervention and the average treatment effect on the treated (ATT) were estimated.Results In personal–social–emotional development, the intervention reduced internalising difficulties (31.03%, CI: 29.39 - 36.72%; ATT = 0.63, CI: 0.55 - 0.67), externalising difficulties (22.68%, CI: 18.88 - 26.90%; ATT = 0.87, CI: 0.71 - 1.01), and emotional dysregulation (3.45%, CI: 3.08 - 4.24%; ATT = 0.06, CI: 0.06 - 0.08), while independence and self-regulation improved by 1.76% (CI: 1.63 - 2.13%; ATT = 0.04, CI: 0.04 -0.05). Language outcomes showed a 21.91% reduction (CI: 8.73 - 29.73%; ATT = 2.08%, CI: 0.88 - 2.64%) in parental concern and an 8.20% increase (CI: 7.41 - 8.77%; ATT = 4.58, CI: 4.21 - 4.82) in naming vocabulary score. Cognitive scores improved by 4.95% (CI: 4.56 - 5.52%; ATT = 2.60, CI: 2.40 -2.85) in pattern construction and 4.85% (CI: 4.16 - 4.89%; ATT = 2.74, CI: 2.39 - 2.78) in picture similarity. Physical development showed no significant change.Conclusion We found evidence that childhood poverty reduction in the UK could improve most domains of school readiness.