Childcare vouchers and tax free childcare

[Tomatoandbasil]

Both me and DH get childcare vouchers at the moment. We have one child using childcare but I’m pregnant so soon there will be two. A calculator tells me we will be better off using tax free childcare instead of vouchers. If we have built up vouchers in our account can we also start using tax free or do we need to use up the vouchers first before starting a tax free account?

Hi, I think you get a 2/3 month window of being able to use both at the same before having to switch to one only.

You don’t to have to use up vouchers that you have already paid for, but you have to exit the childcare voucher scheme within 3 months of opening a tax free child care account.

As poster above says you don’t need to rush to use the vouchers just stop contributing to them

Oh that’s great! So we can build up the childcare vouchers now and then swap after maternity leave!

@Tomatoandbasil

Oh that’s great! So we can build up the childcare vouchers now and then swap after maternity leave!

Yes. Just wait to apply for tax free childcare in the case so you apply 3 months before you want to switch.

When will your eldest be 3? Once you can access the 30 hours childcare the vouchers would still be the best option. You can build them up to use even for school holiday cover. Many also have discount services like 20% off of shopping.

My eldest is already older than 3 so we are paying for before and after school childcare. Would vouchers still be better?

We are likely to be paying around £7000-8000 a year for DC2 and around £1500 for DC1.

I used the gov calculator but it only seemed to tell me how much we ‘could’ save.

Does anyone know if we are better sticking with vouchers or moving to tax free childcare?

With the voucher system you can use it until children are 15 but with tax free it’s until the child is 12. So you may need to think about if you will still need before and after school care for first few years of high school.

Martins money tips has a good explanation on his website. Might help you decide.

@jannier

When will your eldest be 3? Once you can access the 30 hours childcare the vouchers would still be the best option. You can build them up to use even for school holiday cover. Many also have discount services like 20% off of shopping.

This isn’t universally true. As an example, your tax bracket can affect the answer as well as actual childcare costs.

@ @GeorgieTheGorgeousGoat.
Thats why I've pointed op to martins money tips that explains it all and has links to calculators to work it out.

The calculators just seem to give me a you could save this much as in the maximums. It’s confusing! I earn a tiny amount over £50k so does that make me a higher rate tax payer? Or does my salary sacrifice of childcare vouchers (or pension contributions?) mean I’m a basic rate tax payer because they easily take me under £50k? DH is definitely a basic rate tax payer.

Sounds like you are a basic rate tax payer if your salary sacrifices take you under £50k.