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Here’s why you may be financially better off with Childcare Vouchers

Posted on 12 March 2018

Update: Since this article was originally published the government has extended the deadline to join a Childcare Vouchers scheme to October 2018. The precise date in October is yet to be confirmed by HMRC. All other information provided in this article remains relevant.


As you’re probably aware, your childcare funding options have changed. The government have rolled-out a new scheme called Tax-Free Childcare (TFC). As a result, Childcare Voucher schemes will be closed to new joiners from 6th April 2018, and you (and any partner) cannot benefit from both schemes at the same time.

What’s more, if you leave Childcare Vouchers to join Tax-Free Childcare you will not be able to re-join.

The good news is if you are already on a Childcare Vouchers scheme you can continue to benefit from the savings for as long as:

• You remain with your current employer

• Your child is eligible

• You receive at least one voucher payment within a 12 month period

However, if by the 5th April 2018 you will not have been in receipt of any vouchers for 12 months or more, you will need to be in receipt of new vouchers before this date to remain eligible. Similarly, if your 12 month break in payments is due to end after this date, you will need to have received at least one voucher payment before the 12 months is up. Speak to your employer today to arrange new vouchers.

If you have yet to join a Childcare Vouchers scheme, and would like to, you need to take action now. To join (or rejoin) the Childcare Vouchers scheme, speak to your employer or HR department straight away – they will also be able to advise you when the cut-off date for applying is in your organisation.

Why should you stay with Childcare Vouchers?

According to research, 57% of families would be worse off with TFC than with Childcare Vouchers. However, what is right for you will depend on both your current and future circumstances (e.g. an increase in earnings or stopping work could mean you are not eligible for some childcare support). But generally speaking here are the groups of families who will be better off with Childcare Vouchers:

  • Couples where one parent doesn’t work (or earns less than £120/week)
  • Basic-rate taxpayers with childcare costs of £9,336/year or less
  • Higher-rate taxpayers with childcare costs of £6,252/year or less
  • Parents who earn £100k+/year
  • Parents with childcare costs for children aged between 12 and 15
  • Parents who claim Child Tax Credits or Universal Credit with Childcare Vouchers, where combined savings exceed those offered by Tax-Free Childcare

Information and figures provided are for general guidance only. Please note, we are unable to provide advice on individual circumstances.

If you’re unsure, remain on the Childcare Vouchers scheme to keep your options open. For example, you could keep your eligibility 'active' by contributing from as little as £1/month.*

For more information on the changes, download our ‘Parent’s Guide to Childcare Vouchers & Tax-Free Childcare’.


*Minimum contribution may vary – please check with your employer