Childcare vouchers explained What are childcare vouchers?
Childcare vouchers are a great tool that parents can use to save thousands of pounds on childcare. If you have a child aged under 16, you should definitely consider making the most of these vouchers.
The voucher scheme works by allowing you to buy childcare vouchers (which can be used to pay for childcare) directly from your gross salary - before tax and national insurance are deducted.
If you are a basic-rate taxpayer, you could save around £900 a year in tax and national insurance payments. Plus, both parents are allowed to get childcare vouchers if they’re both working – so a family’s savings could total up to £1,800 a year.
How can I get childcare vouchers?
The only way to get childcare vouchers is through your employer. If you are interested, you should contact your human resources department to find out whether it has a voucher scheme and what’s on offer. If your employer does offer childcare vouchers, you should be able to buy these whether you are a full or part-time employee.
Companies may offer their own scheme, or they may offer vouchers through a childcare voucher provider – such as Kiddivouchers, Employersforchildcare, Edenred or Computershare Voucher Services.
Many big and small employers offer a childcare voucher scheme, and if yours doesn’t, you could try and persuade it to start - the scheme can save the employer money as well. Contractors and freelancers can claim childcare vouchers through a Limited Company.
Warning: if you currently receive childcare tax credits, you need to consider whether these will be affected before you sign up for childcare vouchers - as in some situations parents can end up worse off using childcare vouchers. See our advice in childcare vouchers vs childcare tax credits to find out how your childcare tax credits may be affected.
How does the scheme work?
Most employers that offer childcare vouchers do this through ‘salary sacrifice’. This means that your salary will be decreased by the amount that you’d like to give up to claim in vouchers.
This will be deducted before tax and national insurance, and currently you can claim up to £55 a week, or £243 a month in vouchers for basic-rate tax payers. If you’re a higher-rate (40%) tax payer you can claim a reduced rate of £28 a week and £124 a month. For additional-rate (50%) earners the amount is £22 a week or £97 a month.
This limit applies no matter how many children you have, but the limit is per person – so if both parents claim, they can get up to £110 of vouchers a week in total.
To understand what rate of tax you are paying, visit our tax rates, allowances and amounts guide.
You might get your childcare vouchers as paper or electronic vouchers directly from your employer, or your employer may ask a childcare voucher provider to give them to you. When initially setting up the scheme, there may be a delay in receiving the vouchers, even if money has been taken from your salary. Speak to your employer or voucher provider for details.
Where can I spend childcare vouchers?
It’s not just childcare for young children that can be bought using these vouchers – they can be used for older kids, too. You can use them for children until they turn 15, and often longer, depending on when their birthday falls.
Officially, children qualify up to the first Saturday following 1 September after their 15th birthday, so if your child is born on the 5 September, you could use these vouchers for them until they are almost 16.
You can use vouchers for nurseries, childminders and preschool, but they can also be used for a variety of other types of childcare, including after-school activities and childcare over the summer holidays. Which? members can find recommended childcare providers in their area by visiting Which? Local, our local services review site.
If your employer provides childcare, either contracted outside of the workplace, or childcare within your building, the rules on how much you pay that is not tax and national insurance deducted remains the same as paying for childcare yourself with vouchers. Your employer may offer additional support on top of the childcare voucher, but you will have to speak with them directly for details.
Also, you don’t have to spend your childcare vouchers in the week or month you receive them. They have a long expiry date, so you can save them up to use later – for example you may save them for the school holidays when your childcare costs may be higher than normal.
The main criterion for using childcare vouchers is that the childcare provider must be registered with Ofsted (Office for Standards in Education, Children’s Services and Skills). The childcare provider also needs to agree to receiving payment or part-payment with vouchers, and make an agreement with your employer. Ask your employer or childcare voucher provider for details on how to set this up.
Is my childcare provider registered?
You can usually find out whether a childcare provider is registered simply by asking them, but if you want to check you can call your local Families Information Services. You can find their details by searching on the National Association of Family Information Services website, or by calling 0800 234 6346.
Plus, all registered childcare providers have a unique reference number (which appears on their most recent registration certificate), and you can check whether their registration is still valid by calling Ofsted on 0845 640 4040 or visiting www.ofsted.gov.uk.