Tax free child care or vouchers?

[Janeyraemer]

I have a 5 year old and 9 month old and I am currently in maternity leave. I have a nanny due to start in September and whilst on maternity leave I kept the childcare vouchers scheme running. Recently I have heard of the tax free government scheme. Which one is most cost effective and are there any exclusions? Many thanks

Does either parent earn over £100,000? If yes, then vouchers are only option.

Does only one parent get childcare vouchers? With two children TFC can be worth up to £4000 where as if only one parent gets vouchers that could be worth a little under £1000. Will your nanny be paid over £20,000 pa gross?

Childcare vouchers can be used until child aged 16, TFC is until age 11 (September before the child's 12th Birthday). Is either child disabled? If so then the age restrictions change.

When I looked at it, it depended on childcare bill. Lower bills then childcare vouchers - which save you more money but are limited to I think £243 a month per parent - so if both are buying full amount and that covers childcare then vouchers are best. However after that £500 mark at some point the TFC is better. I never worked out at what point it would be better as our bills at the time TFC were never more than £200 a month.

Is your nanny Ofsted registered? If not then you won’t be able to use either scheme to pay her as the childcare provider has to be Ofsted registered if in England to be eligible to use them.

There's an online calculator which will tell you which one is the best value for you.