Mumsnet Talk

We pay for child care by child care vouchers(both of us) now. What is the childcare element of working tax credit? Which is better?

Childcare vouchers are paid for by your employer (usually as part of an arrangement by which you agree to take a lower salary).

Working Tax Credit, including the childcare element, is a state benefit.

The answer to which is better for you is not simple, HMRC provide this calculator to help.

http://www.moneysavingexpert.com/family/childcare-costs

Since April 2011 tax credit payouts have dropped from a max 80% of childcare costs to 70%, so more may now start to save using vouchers. Use the HMRC special calculator linked below to see if this applies to you.

If you're not eligible for childcare tax credits. In this case, there's no problem, so if you're a couple where one works under 16 hours a week, or a single parent who does, or your income is too high to qualify, then there's no impact. So go for the vouchers.
Childcare costs above £175 a week for one child, £300 for two or more? You will always be better off using vouchers for any amount above that, and may be better off for amounts below (the higher your salary the more likely).
Family income below £42,000? (depending on how many kids you have): You may be better off sticking with ONLY tax credits and not getting vouchers so it's important to do a more detailed comparison use the Government’s HMRC vouchers vs. credits calculator to check in detail or call the Tax Credit Helpline on 0345 300 3900.