Tax. Getting this right is one of the biggest challenges you face, as a business and as an individual. We can help.

What else is in this section?

Childcare Vouchers

Childcare Vouchers

Using Government childcare vouchers to pay for childcare can save parent thousands of pounds a year. The scheme is operated by employers and allows childcare to be paid for from pre-tax salary. 

Basic rate taxpayers can buy up to £55/week voucher, generating a maximum annual tax/National Insurance saving of £930. This is per parent, and is not affected by the number of children you have.  For higher rate taxpayers the annual saving is £630 and for Top rate tax payers, the figure is £590. 

The current scheme “Childcare Vouchers” is closing to new applicants from April 2018 and a new scheme Tax Free Childcare is being introduced. 

The new scheme, launched in April 2017 gives eligible families an extra 20% towards childcare costs. In total families can use the scheme to pay for up to £10,000 per child each year, so eligible families could receive up to £2000 per child towards childcare costs.

A simple comparison of the two schemes was conducted by and they conclude that there will be winners and losers depending on your own circumstances.

 In general terms: 

Tax-Free Childcare is best suited to:

  • Self-employed people or couples who earn less than £100,000 each
  • Parents with more than one child and high childcare costs

Childcare Vouchers are best suited to:

  • Couples where one parent doesn't work
  • Basic-rate taxpayer parents with total childcare costs of £9,336 or less
  • Higher-rate taxpayer parents with total childcare costs of £6,252 or less
  • Higher earners, earning £100,000+ (or in a couple where one earns £100,000+) as they are eligible for Childcare Vouchers but cannot participate in the Tax-Free Childcare scheme.

If you would like to speak to us about your own circumstances, please do get in touch.