Glossary · UK
What is Employer-Supported Childcare (Childcare Vouchers)?
A salary sacrifice childcare benefit, closed to new entrants since October 2018, letting existing members exchange up to GBP 55 a week of salary for tax and NI free childcare vouchers.
Full Definition
Employer-Supported Childcare, commonly known as Childcare Vouchers, was a salary sacrifice scheme that let an employee give up part of their salary in exchange for vouchers to pay for registered or approved childcare, with the sacrificed amount exempt from Income Tax and National Insurance up to a weekly limit. The exempt amount depends on which tax band the employee was in when they joined: GBP 55 a week (about GBP 243 a month) for basic-rate taxpayers, GBP 28 a week for higher-rate taxpayers, and GBP 25 a week for additional-rate taxpayers, reflecting a 2011 change designed to stop the relief being worth more to higher earners. The scheme closed to new applicants on 4 October 2018, when it was superseded by Tax-Free Childcare, but anyone who joined before that date can remain in it indefinitely as long as they do not have a continuous gap in vouchers of 52 weeks or more, and they stay with the same employer. Because Childcare Vouchers and Tax-Free Childcare cannot be claimed at the same time, existing voucher members need to compare the two before switching, since Tax-Free Childcare is not always better -- particularly for higher-rate taxpayers with lower childcare costs, or families where a partner claims Universal Credit, which is incompatible with Tax-Free Childcare but not with vouchers.