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Childcare - Tax Credits guidance

You cannot claim tax credits help for childcare costs met by your employer or with childcare vouchers. We are currently developing further guidance to help you to work out if you will benefit from tax and National Insurance savings from employer-provided childcare support if you receive tax credits. This will be added to this page as soon as it is available.

Find out information about how tax credits can help you with your childcare costs.

Booklet WTC5

Tax Credits Calculator

Questions and Answers

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.

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