Childcare Vouchers vs Tax-Free Childcare: Which Scheme is Right for You?

If you already receive childcare vouchers, compare the actual savings shown by payroll with the Tax-Free Childcare top-up for your family. The best option depends on eligible bills, both parents’ circumstances and the scheme limits.

Who can still get childcare vouchers?

Vouchers closed to new applicants in October 2018. Existing users generally need to stay with the same employer, which must continue the scheme. Ordinary moves to a new employer do not preserve access. Business transfers can have different rules. Check the government voucher guidance and ask payroll about any break in contributions.

How do the savings differ?

Vouchers usually replace part of your salary, saving tax and National Insurance. The amount sacrificed is not the same as the saving. Ask payroll for the current net saving for each participating parent. Tax-Free Childcare instead contributes towards each eligible child’s bill, subject to its separate cap.

Our example: a family spends £500 a month on eligible care. With enough quarterly allowance, Tax-Free Childcare contributes £100 a month, or £1,200 across 12 months. If payroll estimates a combined voucher saving of £80 a month, that would be £960 annually. These assumed figures illustrate how to compare actual savings rather than voucher face values.

What are the Tax-Free Childcare income rules?

The normal minimum expected earnings for the next three months in 2026/27 are shown below. Each parent generally needs to qualify, with exceptions for certain circumstances. See HMRC’s eligibility rules.

Neither parent’s expected adjusted net income can exceed £100,000 for the current tax year. Tax-Free Childcare normally ends on 1 September after the child’s 11th birthday, or 16th birthday if they meet the disability rules. Voucher age rules differ, so check your provider before switching for an older child.

What happens if I switch?

You and any partner receiving vouchers must tell your employers within 90 days of applying for Tax-Free Childcare so new vouchers stop. Once you leave for Tax-Free Childcare you cannot rejoin. Existing vouchers can still be spent. Follow the official switching instructions and the voucher guidance above.

What should I compare before deciding?

• Use the paid childcare bill after funded hours, rather than the full nursery fee.
• Compare both parents’ payroll savings with the expected top-up for every eligible child.
• Check age limits, provider acceptance and expected changes to work or care.
• If you receive Universal Credit, compare the whole award before changing schemes.

Use our calculator to estimate the Tax-Free Childcare deposit and top-up. Use payroll and the official childcare checker for the wider comparison.