Childcare Voucher Calculator & Legacy Scheme Guide
While the Childcare Voucher scheme closed to new entrants in October 2018, it remains a vital financial tool for thousands of parents across the UK who joined prior to the deadline. This legacy scheme allows employees to sacrifice a portion of their pre-tax salary to pay for registered childcare, offering significant savings on Income Tax and National Insurance (NI).
This comprehensive guide and calculator will help you determine the exact savings based on your tax band and compare these results directly against the government's newer Tax-Free Childcare scheme.
Savings Calculator
Enter your details to compare the Legacy Voucher Scheme vs. Tax-Free Childcare.
Your Estimated Savings
*Calculations based on 2025/2026 tax year rates. Assumes standard Class 1 NI (8% Basic, 2% Higher). Voucher savings include both Tax and NI relief on the maximum eligible salary sacrifice amount.
Understanding the Legacy Childcare Voucher Scheme
The Childcare Voucher scheme is a salary sacrifice arrangement. This means you agree to reduce your salary by a certain amount, and in return, your employer provides vouchers of the same value. Because the sacrifice happens before tax and National Insurance are deducted, you only pay tax on the remaining salary.
Key Limits by Tax Band
The amount you can sacrifice tax-free depends on when you joined the scheme and your tax band. For those who joined after 6 April 2011, the limits are designed to offer roughly equivalent tax savings to all taxpayers, regardless of income.
- Basic Rate Taxpayers: Can sacrifice up to £55 per week (or £243 per month). This offers the highest potential saving.
- Higher Rate Taxpayers: Can sacrifice up to £28 per week (or £124 per month).
- Additional Rate Taxpayers: Can sacrifice up to £25 per week (or £110 per month).
Financial Breakdown of Savings
For the 2025/2026 tax year, the savings remain substantial for existing members:
- Basic Rate: With 20% Income Tax and 8% National Insurance, you save 28% on the sacrificed amount. On the maximum £243/month, this equates to roughly £816 per year per parent.
- Higher Rate: With 40% Income Tax and 2% National Insurance, you save 42%. On the capped £124/month, the saving is approximately £625 per year.
Note: If both parents are eligible through their respective employers, these savings can be doubled for the household.
Childcare Vouchers vs. Tax-Free Childcare
The government introduced Tax-Free Childcare (TFC) as a replacement for vouchers. You cannot use both simultaneously. Under TFC, for every £8 you pay into an online account, the government adds £2. This is effectively a 20% discount on childcare costs.
| Feature | Childcare Vouchers (Legacy) | Tax-Free Childcare (New) |
|---|---|---|
| Eligibility | Closed to new entrants. Only for existing members. | Open to all eligible working parents. |
| Max Saving | ~£933/year per parent (Basic Rate). | £2,000/year per child (£4,000 if disabled). |
| Age Limit | Up to 15 (16 if disabled). | Up to 11 (16 if disabled). |
| Employer Role | Arranged through employer (salary sacrifice). | Independent of employer. |
Which Scheme is Better?
The "better" scheme depends entirely on your specific circumstances:
- Vouchers win if: You have low childcare costs (since the voucher saving is fixed regardless of cost, provided you spend the voucher amount) or fewer children. It is also beneficial if one parent earns over £100,000 (making them ineligible for TFC) but was already in the voucher scheme.
- Tax-Free Childcare wins if: You have high childcare costs (above ~£4,700 per year) or multiple children. Since the TFC limit is per child rather than per parent, large families often benefit more from the new scheme.
Frequently Asked Questions
Can I still join the Childcare Voucher scheme in 2026?
No, the Childcare Voucher scheme closed to new entrants on 4 October 2018. If you are not already a member, or if you have changed employers (unless under TUPE transfer), you cannot join. You should check eligibility for Tax-Free Childcare instead.
How much can I save with Childcare Vouchers?
Savings depend on your tax band. Basic rate taxpayers can sacrifice up to £55/week (£243/month), saving approx £933/year in tax and NI (depending on current NI rates). Higher rate taxpayers can sacrifice £28/week, saving roughly £625/year. Additional rate taxpayers can sacrifice £25/week.
Can I use both Childcare Vouchers and Tax-Free Childcare?
No, you cannot use both schemes simultaneously. If you sign up for Tax-Free Childcare, you must inform your employer to stop your Childcare Vouchers. Once you leave the voucher scheme, you likely cannot rejoin.
What happens to my vouchers if my child turns 15?
Eligibility for Childcare Vouchers generally ends on 1st September following your child's 15th birthday (or 16th if they are disabled). Any accrued vouchers can still be spent, but you cannot purchase new ones tax-free.
Do Childcare Vouchers expire?
While the salary sacrifice funds themselves are your money, vouchers held in provider accounts can have expiry dates (often 12-24 months). However, you can usually request these be reissued or refunded (subject to tax/NI deductions) if they expire.
Is Tax-Free Childcare better than Vouchers?
Generally, Tax-Free Childcare is better for those with higher childcare costs or more children, as the government tops up £2 for every £8 paid (up to £2,000/year per child). Vouchers are better for those with lower childcare costs or fewer children, especially if one parent is a high earner ineligible for Tax-Free Childcare.
Does salary sacrifice affect my pension?
It can. Since salary sacrifice reduces your gross taxable salary, your pension contributions (and employer contributions) might decrease if they are calculated based on the post-sacrifice salary. You should check your specific pension scheme rules.