Childcare Vouchers Are Closed to New Entrants — What Existing Users Need to Know (2026/27)

A scheme that is closed but not extinct

Childcare vouchers stopped accepting new members on 4 October 2018, when the government replaced the scheme with Tax-Free Childcare for anyone joining after that date. However, the scheme was not abolished outright for existing users. If you were enrolled with your employer's voucher scheme before the closure date and have kept your enrolment continuous — no gap of 52 weeks or more without receiving vouchers — you can keep using it indefinitely, as long as your employer continues to offer it.

This creates an unusual situation in 2026/27: a benefit that is simultaneously "closed" to the wider working population but still fully live for a shrinking pool of long-standing employees, some of whom have now used it for eight years or more.

How the salary sacrifice mechanism works

Vouchers are provided through salary sacrifice — you agree to give up a portion of gross salary in exchange for vouchers of equivalent value, which your employer then arranges for a registered childcare provider. Because the sacrificed amount never counts as taxable pay, you avoid income tax and employee National Insurance on it.

The maximum tax-and-NI-free amount depends on when you joined and your tax band at that time:

Worked example: the value of staying on vouchers

A basic-rate taxpayer sacrificing the full £55 a week (£2,860 a year) saves 20% income tax (£572) and 8% employee NI (£228.80) — a combined annual saving of £800.80. If both parents in a couple are each enrolled and both sacrifice the maximum, the household saving roughly doubles to £1,601.60 a year, which is often more valuable than Tax-Free Childcare's 20% top-up on the same spending level, particularly once you account for the NI saving that Tax-Free Childcare does not offer.

When Tax-Free Childcare wins instead

Tax-Free Childcare gives a straightforward 20% government top-up: for every £8 a parent pays into a dedicated childcare account, the government adds £2, up to a maximum top-up of £500 per child per quarter (£2,000 a year), or £1,000 per quarter (£4,000 a year) for a disabled child. Unlike vouchers, there is no cap tied to a weekly sacrifice limit — families with higher childcare bills, such as those with two or more children in nursery simultaneously, can benefit from the full £2,000-per-child top-up on much larger total spending than the voucher scheme's fixed weekly ceiling would allow.

Making the switching decision

Because moving to Tax-Free Childcare is irreversible, households eligible for both should model their actual annual childcare spend and tax position before switching:

• Stay on vouchers if you are a single-earner household with modest childcare costs close to or below the weekly voucher limit, since the combined tax-and-NI saving on a smaller spend can beat a 20% top-up.
• Switch to Tax-Free Childcare if your household childcare bill is well above what one or two parents' voucher allowances would cover, since the 20% top-up scales with spending far beyond the voucher ceiling, and if you would otherwise fail the 30-hours or Tax-Free Childcare minimum-income test with vouchers alone.

Remember that Tax-Free Childcare and 30 hours free childcare share the same eligibility test and account, so a household already using 30 hours may find switching administratively simpler even before considering the pure cash comparison.