How Long Do Childcare Vouchers Take To Clear

The Tax-Free Childcare scheme replaced the Childcare Vouchers scheme, which closed to new applicants in October 2018. If you were signed up for vouchers before the scheme closed, you can continue to get them as long as you stay with the same employer, and it still offers them.

At a glance: Vouchers or Tax-Free Childcare?

Some people receiving vouchers might be better off claiming Tax-Free Childcare instead. If you're thinking of switching, compare what you'd get with each scheme because you can't go back to vouchers once you've moved to Tax-Free Childcare.

Whether you'll be better off depends on how much you earn and pay in tax and for childcare – our handy infographic below will help determine which scheme's best for you.

See if you win or lose with Tax-Free Childcare

Tax-Free Childcare wins for:

Parents with more than one child and high childcare costs, as the help available goes up with the number of children. The limit for childcare vouchers is per parent and doesn't factor in the number of kids you have.

Self-employed people or couples who earn less than £100,000 each, as they're eligible for Tax-Free Childcare, but didn't qualify for childcare vouchers.

Childcare Vouchers win for:

Couples where one parent doesn't work, as they're not eligible for Tax-Free Childcare unless the non-working partner receives a qualifying benefit, whereas with childcare vouchers only one parent needs to work.

Basic-rate taxpayer parents with total childcare costs of £9,336/year or less. Under this amount, the saving you make with childcare vouchers exceeds the saving you can make with Tax-Free Childcare.

Higher-rate taxpayer parents with total childcare costs of £6,252/year or less. Under this amount, the saving you make with childcare vouchers exceeds the saving you can make with Tax-Free Childcare.

Higher earners, as anyone earning £100,000+ a year (or in a couple where one earns £100,000+ a year) isn't eligible for the Tax-Free Childcare scheme, while there is no income limit with childcare vouchers.

Here are a couple of quick examples to see how it works in practice...

Low childcare-usage family

Olly Onechild and his wife spend £500 on childcare across the MONTH for after-school clubs and pick-ups etc.

If both are basic-rate taxpayers using vouchers, this would cost them £344 – a saving of £156 compared with not using them. But if they used Tax-Free Childcare, it'd cost them £400 – £56 more expensive than vouchers.

If both are higher-rate taxpayers using vouchers, this would cost them £396 – a saving of £104 compared with not using them. And if they used Tax-Free Childcare, it'd cost them £400 – £4 more expensive than vouchers.

High childcare-usage family

Molly Muchcare and her wife have two toddlers and spend £2,000 on childcare (in total for both toddlers) across the MONTH for nursery and pick-ups etc.

If both are basic-rate taxpayers using vouchers, this would cost them £1,844 – a saving of £156 compared with not using them. But if they used Tax-Free Childcare, it'd cost them £1,668 – £176 cheaper than vouchers.

If both are higher-rate taxpayers using vouchers, this would cost them £1,896 – a saving of £104 compared with not using them. And if they used Tax-Free Childcare, it would still cost them £1,668 – £228 cheaper than vouchers.

Use the childcare calculator to check your exact circumstances

If you want a personalised assessment, you can use the Government's childcare calculator to see what help you're entitled to and how much you could get.

To help you gauge which option's best for you, we've also produced a table looking at different family circumstances to see which scheme is the winner.

We've examined savings at a level of £10,000 childcare costs per child, per year, and assessed who'd win and under which scheme - see the dropdown below for full breakdown.

Childcare Vouchers vs Tax-Free Childcare – how much can you save?

Childcare Vouchers vs Tax-Free Childcare – how much could you save in 2021/22? (assumes £10,000 childcare costs per child)

	CHILDCARE VOUCHERS–MAXIMUM TAX & NI SAVING (1)	TAX-FREE CHILDCARE–MAXIMUM GOVERNMENT CONTRIBUTION
	Assumes you signed up after April 2011	One child	Two children (2)
SINGLE, EMPLOYED PARENT
No income tax payable	None	£2,000 (4)	£4,000 (4)
Basic-rate taxpayer	£933 (3)	£2,000	£4,000
Higher-rate taxpayer	£625	£2,000	£4,000 (5)
Top-rate taxpayer	£623	None	None
SINGLE, SELF-EMPLOYED PARENT
No income tax payable	None	£2,000 (4)	£4,000 (4)
Basic-rate taxpayer	None	£2,000 (4)	£4,000 (4)
Higher-rate taxpayer	None	£2,000	£4,000 (5)
Top-rate taxpayer	None	None	None
COUPLE: BOTH EMPLOYED AND ELIGIBLE FOR VOUCHERS
No income tax payable	None	£2,000 (4)	£4,000 (4)
Basic-rate taxpayer	£1,866 (3)	£2,000	£4,000
Higher-rate taxpayer	£1,250	£2,000	£4,000 (5)
Top-rate taxpayer	£1,246	None	None
COUPLE: ONE EMPLOYED, ONE SELF-EMPLOYED
No income tax payable	None	£2,000 (4)	£4,000 (4)
Basic-rate taxpayer	£933 (3)	£2,000	£4,000
Higher-rate taxpayer	£625	£2,000	£4,000 (5)
Top-rate taxpayer	£623	None	None
COUPLE: BOTH SELF-EMPLOYED
No income tax payable	None	£2,000 (4)	£4,000 (4)
Basic-rate taxpayer	None	£2,000	£4,000
Higher-rate taxpayer	None	£2,000	£4,000 (5)
Top-rate taxpayer	None	None	None
COUPLE: ONE EMPLOYED, ONE NOT WORKING
No income tax payable	None	None	None
Basic-rate taxpayer	£933 (3)	None	None
Higher-rate taxpayer	£624	None	None
Top-rate taxpayer	£620	None	None
Table uses 2020/21 income tax thresholds. (1) The maximum saving doesn't change depending on the no. of children. Amounts are a MAXIMUM annual gain based on salary sacrifice. (2) Amount increases by £2,000 for each child. There is no maximum. (3) You can only claim vouchers if you earn the national minimum wage, about £14,924 for 35hrs/week if you're over 21. (4) You need to be working, classed as earning at least £140/week. (5) Assumes earning less than £100,000 threshold.

What to do if Tax-Free Childcare is better for you

If you want to move over to the Tax-Free Childcare scheme, you just need to apply. Once you've successfully done so, you'll need to give your employer written notice that you want to leave its voucher scheme permanently. This needs to be done within three months. The easiest way to do this is to call your voucher provider directly to ask it to stop your membership of the scheme.

Once you've left the voucher scheme, you can use stockpiled vouchers alongside Tax-Free Childcare to pay towards your childcare costs. Make sure you check expiry dates with the voucher provider.

What to do if sticking with vouchers is better for you

If you've gone through the infographic and the comparison table above and have worked out you're better off staying with vouchers, you can continue to get them as long as you stay with the same employer, and it still offers the vouchers. But it's vital to to know that once you move away from vouchers, you can't go back.