Compare Childcare Savings Schemes
How the Schemes Work
Childcare Vouchers (salary sacrifice): Available only to employees whose employers joined before October 2018. Basic-rate taxpayers can sacrifice up to £2,916/year from salary, saving income tax and National Insurance. Higher-rate taxpayers are limited to £1,484/year in savings.
Tax-Free Childcare: Open to all working parents (and self-employed) earning between ~£9k and £100k per year. For every 80p deposited, the government adds 20p. Maximum government contribution is £2,000 per child per year (£4,000 for disabled children).
Frequently Asked Questions
Tax-Free Childcare vs childcare vouchers — which is better?
It depends on your circumstances. Tax-Free Childcare (TFC) offers a 20% government top-up on up to £10,000 spending per child per year (max £2,000/child/year). Childcare vouchers via salary sacrifice save basic-rate taxpayers up to £2,916/year in tax and NI combined, but are only available if your employer joined the scheme before October 2018. Higher-rate taxpayers save less with vouchers (£1,484/year) making TFC often better. Use this calculator to compare.
How does Tax-Free Childcare work in 2026?
Tax-Free Childcare is a government scheme where for every 80p you deposit into an online childcare account, the government adds 20p — effectively a 25% bonus on your deposits. You can deposit up to £8,000 per child per year (under 11), and the government adds up to £2,000 per child per year (£4,000 for disabled children). The money can only be used with Ofsted-registered providers.
Can I still use childcare vouchers in 2026?
Yes, but only if you joined your employer's scheme before it closed to new entrants on 4 October 2018. If you were already enrolled before this date and have not had a break in employment, you can continue to receive vouchers. New employees and those who left the scheme cannot re-join. The scheme has not been abolished, just closed to new entrants.
Do both parents need to work for Tax-Free Childcare?
Generally yes. Both parents (or the sole parent in a single-parent family) must be in work (including self-employment) and each earning at least the National Minimum Wage for 16 hours per week — approximately £2,167 per quarter in 2026. Neither parent can be earning over £100,000 per year. There are exceptions for those on parental leave or temporarily unable to work.
How much does Tax-Free Childcare pay per child?
The government contributes 20% (up to £2,000 per year) per eligible child under 11 (under 17 for disabled children). If you have three eligible children, you could receive up to £6,000 per year in government top-ups. You must use an Ofsted-registered childcare provider. The money is held in a government-managed account at National Savings & Investments.