3rd July 2026
Why switching away from Childcare Vouchers could save you money
Over the past months, the Family Benefits Advice Service has been contacted by lots of parents who are considering moving from their existing Childcare Vouchers to an alternative form of support for their childcare costs.
What has changed?
For most, the alternatives will now give more financial support for childcare costs than Childcare Vouchers currently do.
Since the 2018 closure of the Childcare Voucher scheme to new entrants, the amount of support available on the alternative schemes has increased, whereas the support through the Childcare Voucher scheme has decreased.
Childcare Vouchers – Support has decreased
Parents can save money through Childcare Vouchers by not having to pay Tax and National Insurance Contributions on the Childcare Voucher amounts. However the rate of employee NIC is now lower than it was in 2018.
In 2018 this saving was 32% of childcare costs, 20% Tax + 12% NIC.
In 2022 this rose briefly to 33.25% of childcare costs, 20% Tax + 13.25% NIC.
The savings have now dropped to only 28% of childcare costs, 20% Tax + 8% NIC.
Universal Credit – Support has increased
When Universal Credit replaced Tax Credits in 2018 the amount of support went from 70% to 80% of registered childcare costs.
The support through Universal Credit is now 85% of registered childcare costs.
Tax-Free Childcare – Support has increased
Tax-Free Childcare pays 20% of registered childcare costs, plus an additional 15% discount since 2024 for parents living in Northern Ireland through the Northern Ireland Childcare Subsidy Scheme. In addition, the maximum amount of support through the NICSS has increased by over 21% since its launch, to £203 per month.
Northern Ireland Childcare Subsidy Scheme – Support for more children
The Northern Ireland Childcare Subsidy Scheme gives a 15 % discount on childcare costs, when first introduced in 2024 it was only for children under primary school age. Since September 2025 this was extended to all children until 1st September after their 11th birthday, or 16th birthday if the child has a disability.
Considering stopping Childcare Vouchers?
Childcare Vouchers users should contact the Family Benefits Advice Service on fbas@employersforchildcare.org, an advisor will be able to work out how much you will save through an alternative form of support.
Childcare Voucher users should use up any balance they have in their Childcare Voucher account to avoid building up more than you need.
If you think you already have enough childcare vouchers you should your stop salary sacrifice as soon as possible.
In some cases, your childcare provider may accept pre-payment towards future childcare costs which will allow you to clear you voucher account sooner and benefit from the Tax and NIC savings you have already made on the balance in the account.
HMRC states that it may be possible to request a reimbursement if employees are unable to use childcare vouchers as a result of exceptional and unforeseeable circumstances, although reimbursements are always at the discretion of the employer
Further Information
Employersforchildcare.org has a library of advice and information factsheets containing a wealth of useful information for parents on childcare and work-related issues, including our updated ‘Comprehensive Guide to Tax-Free Childcare’.
Contact the Family Benefits Advice Service for a confidential, personalised calculation to work what is the best alternative to the Childcare Voucher scheme for your family, fbas@employersforchildcare.org.