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Exceptions : when you would be better off with childcare vouchers

Childcare Vouchers and Exceptions

Most people are better off claiming help with childcare through tax credits instead of using childcare vouchers from their employer. However, there are two exceptions to this rule when childcare vouchers may be the better option. These exceptional cases are:

  • Where your income in this tax year has fallen by more than £2,500 relative to your income last tax year
  • Where your childcare costs exceed £175 per week for one child in childcare and £300 per week for two or more children in childcare

If either of these circumstances apply to you then you may be better off claiming help with childcare costs through vouchers rather than through tax credits.

Things to be aware of:

  • If you are in the first group the maximum you could gain through using vouchers rather than tax credits is £87.45 per year
  • If you are in the second group you can claim the maximum amount allowed for under tax credits (£175 per week for one child in childcare and £300 per week for two or more children in childcare), and you could get the difference between this and what you actually pay in childcare in childcare vouchers.
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