Employer-run childcare vouchers closed to new joiners some years ago, but many parents who joined before the closure can still use them, and often face a choice about whether to stay on vouchers or switch to Tax-Free Childcare. This guide compares both for 2026/27.
How Childcare Vouchers Work (for Those Still On Them)
Employer-run childcare voucher schemes let an employee sacrifice part of their salary in exchange for vouchers to pay a registered childcare provider, saving Income Tax and National Insurance on the sacrificed amount up to a monthly limit, rather than providing a direct government top-up.
The scheme closed to new entrants some years ago, but employees who had already joined before the closure and whose employer continues to run the scheme can generally keep using it, provided they do not have a continuous break in their voucher payments beyond the permitted gap.
How Tax-Free Childcare Works
Tax-Free Childcare is a separate, government-run scheme (not linked to your employer) where parents pay into an online account and the government adds a top-up — commonly described as adding £2 for every £8 paid in, up to an annual cap per child — to spend with a registered childcare provider.
It is generally open to a wider range of working parents than the closed voucher scheme, including the self-employed, but has its own income limits (both a minimum expected income and a maximum earnings cap per parent) that vouchers do not directly apply in the same way.
Choosing Between Them
You cannot use both childcare vouchers and Tax-Free Childcare for the same child, so anyone still on the legacy voucher scheme who is considering Tax-Free Childcare should compare carefully before switching, since switching to Tax-Free Childcare closes the voucher scheme for that parent permanently.
Broadly, low to middle earners with relatively high childcare costs, or families with more than one child, often benefit more from Tax-Free Childcare, while some higher-rate taxpayers with relatively modest childcare costs, still on the legacy voucher scheme, may find vouchers give a comparable or better result — the right answer depends on income, number of children and actual childcare spend, so use both calculators before switching.
Frequently Asked Questions
Can I still join the old childcare voucher scheme?
No — the legacy employer-run childcare voucher scheme closed to new entrants some years ago. Only employees who joined before the closure date, and whose employer still runs the scheme, can continue using vouchers, provided they have not had a disqualifying break in participation.
Can I use both childcare vouchers and Tax-Free Childcare for the same child?
No — the two schemes are mutually exclusive for the same child. If you switch to Tax-Free Childcare, you must give up childcare vouchers for that child (and generally cannot rejoin the voucher scheme later), so compare which is more valuable to you before switching.
Is Tax-Free Childcare open to self-employed parents?
Yes, generally — Tax-Free Childcare is available to a wider range of working parents including the self-employed, unlike the closed employer-run voucher scheme, which depended on your employer offering it as a salary sacrifice benefit.
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Which scheme is worth more for a higher-rate taxpayer?
It depends on your specific childcare costs and how the tax and National Insurance saving from vouchers compares with the government top-up available under Tax-Free Childcare — some higher-rate taxpayers with modest childcare costs still on vouchers find they are better off staying, while others with higher costs benefit more from switching. Compare both using up-to-date figures for your situation.
Are there income limits for Tax-Free Childcare that do not apply to vouchers?
Yes — Tax-Free Childcare has both a minimum expected earnings test and a maximum individual earnings cap for each parent, whereas the legacy voucher scheme is generally available to any employee at an employer offering it, regardless of these specific income tests.
What happens to my vouchers if I stop working for my current employer?
If your new employer does not offer the childcare voucher scheme, you will not be able to continue receiving new vouchers through them, and once you have stopped receiving vouchers for a sufficiently long continuous period, you may lose the ability to rejoin the legacy scheme even with a future employer that still offers it.
Do childcare vouchers or Tax-Free Childcare affect my Universal Credit or Working Tax Credit?
Yes — support through Tax-Free Childcare cannot be combined with Universal Credit childcare costs, tax credits, or childcare vouchers, so households claiming means-tested benefits should compare their overall entitlement carefully, since switching schemes can change what other support you can claim.
Does Tax-Free Childcare or the voucher scheme affect the 30 hours free childcare offer?
You can generally combine either scheme with the free childcare hours offer for eligible working parents, but the eligibility tests for the free hours mirror those for Tax-Free Childcare, so if you are on childcare vouchers instead you should check separately whether you still qualify for the free hours.
Can I have a partner on childcare vouchers while I use Tax-Free Childcare?
No — Tax-Free Childcare eligibility is assessed per child and requires that neither parent is receiving childcare vouchers or Universal Credit childcare support for that child, so both partners generally need to give up vouchers before the household can open a Tax-Free Childcare account.
How do I close my childcare voucher scheme and move to Tax-Free Childcare?
You typically need to tell your employer you want to stop receiving vouchers and then apply for Tax-Free Childcare through the government’s official online service; once you confirm the switch, you cannot rejoin the legacy voucher scheme afterwards, so only do this once you are sure Tax-Free Childcare works out better for you.
Disclaimer: This guide reflects UK rules as they generally apply in 2026/27. This guide is for general information only and is not professional advice. Consult a qualified adviser and refer to gov.uk for current official guidance before relying on any treatment.
