Questions and Answers - employees

Will I be better off accepting childcare vouchers in return for a salary sacrifice or by claiming tax credits help towards my childcare costs?

Your family will generally be better off accepting childcare vouchers in return for a salary sacrifice if you can answer “yes” to one or more of the following:

• your eligible childcare costs are more than £175 per week if you have one child or £300 per week if you have two or more children. In this case you will always be better off accepting childcare vouchers to cover your childcare costs above these limits.
• You are receiving tax credits at the family element (£545 per year, or £1090 per year if you have a baby aged under one) or less and you are claiming for your childcare costs.
• You pay tax on your earnings at the higher rate of 40%.

Your family will generally be worse off or, at best, no better off accepting childcare vouchers in return for a salary sacrifice if you can answer “yes” to all of the following:

• You are receiving tax credits of more than £545 per year (or £1090 per year if you have a baby aged under one) and you are claiming for your childcare costs.
• You do not pay tax on your earnings at the higher rate of 40%.
• Your eligible childcare costs are no more than £175 per week if you have one child or £300 per week if you have two or more children.

If you would like more information to help you to decide whether to opt for employer-support with childcare.