How to Childcare Vouchers affect Tax Credits

[Truimph]

Asking on behalf of someone else..

If someone used childcare vouchers, would their tax credits be reduced by the amount they would save?

In this example, if you receive £500 working and child tax credits every four weeks, and spend £2,000 a month on childcare.. would you be better or worse of with childcare vouchers?

Not sure if that's enough info, to give an accurate answer? I would appreciate any general advice around this. thank you.

You can only claim help with childcare costs with Tax Credits for anything you pay after the childcare vouchers.

For example, if if your total childcare cost is £500 per month, and you use £243 per month of childcare vouchers, you can only claim childcare of £257 per month. Weekly, that's only £60 per week compared to £116 per week without the vouchers.

Also, remember that Tax Credits pays 70% of childcare costs up to £175 per week for one child, or £300 per week for two children, rather than the full amount.

Childcare vouchers are closed to new applicants so you already need to be part of the scheme.

Tax credits are reduced by the amount you've benefitted in vouchers