If you are still in an employer childcare voucher scheme, you hold something that cannot be bought any more. Vouchers closed to new entrants on 4 October 2018. Anyone in a scheme before then can stay in it indefinitely, provided they remain with the same employer, the employer keeps running it, and there is no break of more than 52 weeks.
So the question is not which scheme to join. It is whether to give up the one you have — and that decision is permanent.
The one-way door
You cannot run both schemes. To move to Tax-Free Childcare you serve a Childcare Account Notice on your employer, and that ends your voucher membership irreversibly. There is no route back, even if your circumstances change and vouchers would have suited you better.
Work the numbers before you sign anything.
What each one is worth
Tax-Free Childcare adds 20p for every £1 you pay in — you contribute £8, the government adds £2. The cap is £2,000 per child per year, or £4,000 for a disabled child, applied as £500 per quarter. Unused allowance does not roll over to the next quarter. Crucially, the cap is per child.
Vouchers save you income tax and National Insurance on the amount you sacrifice, up to a weekly cap set by your tax band. The cap is per employee, not per child.
| Your tax band | Annual voucher cap | Saving rate | Maximum annual saving |
|---|---|---|---|
| Basic rate | £2,915 | 28% | £816 |
| Higher rate | £1,484 | 42% | £623 |
| Additional rate | £1,325 | 47% | £623 |
Anyone who joined before 6 April 2011 keeps the £55/week cap regardless of tax band, which is worth more at higher rates than the figures above.
Which wins
For most families with young children, Tax-Free Childcare is worth more, and the gap widens with each child.
- One child, higher-rate parent: up to £2,000 from TFC against £623 from vouchers. TFC wins comfortably, provided you spend at least £8,000 a year on childcare to reach the cap.
- Two children: TFC scales to £4,000; vouchers do not move at all.
- Both parents in voucher schemes: two caps, so up to roughly £1,250–£1,630 combined. Still short of TFC for one child at full spend.
- Low childcare spend: TFC only pays 20% of what you actually spend, so at £2,000 of annual childcare it returns £400. Vouchers could beat it.
- Older children: this is the real voucher advantage. Vouchers cover childcare up to the 1 September after the 15th birthday. TFC stops at the 1 September after the 11th. For a family with a child of 12 to 15 and holiday clubs to pay for, vouchers may be the only option of the two.
Two more differences that decide edge cases: vouchers continue during statutory maternity and paternity pay, which matters if you are planning leave; and Tax-Free Childcare cannot be combined with Universal Credit or tax credits at all, whereas vouchers can sit alongside the funded hours without difficulty.
Who can use Tax-Free Childcare
Both parents, if you are a couple, must each:
- expect to earn at least 16 hours a week at the National Minimum Wage over the coming quarter — for a parent aged 21 or over in 2026/27 that is about £2,644 per quarter;
- have an adjusted net income of £100,000 or less. One parent above that disqualifies the household.
Statutory leave counts as qualifying work, and a partner receiving certain disability or carer's benefits is treated as meeting the earnings test. There is no minimum-earnings test in the first 12 months of self-employment.
You must also reconfirm every three months. Missing a reconfirmation stops the top-ups; the account stays usable for paying providers but stops adding government money until you reconfirm.
Before you serve the notice
A short checklist, because this decision cannot be reversed:
- Work out your actual annual childcare spend. TFC pays 20% of what you spend, capped. If you will not spend enough to beat your voucher saving, do not switch.
- Count the children and their ages. TFC is per child, which usually decides it — unless a child is already over 11.
- Check both parents against the £100,000 test, remembering it is per parent and uses adjusted net income rather than salary.
- Consider timing around parental leave, since vouchers continue through statutory pay.
- Check your provider is signed up to receive Tax-Free Childcare payments. Not every setting is.
Common questions
Can I pause vouchers and try TFC?
No. Serving the Childcare Account Notice ends voucher eligibility permanently. There is no trial period.
Can I use TFC alongside the 30 funded hours?
Yes. Tax-Free Childcare sits alongside both the universal 15 hours and the 30 working-parent hours. It is Universal Credit and tax credits that are incompatible with it.
What happens to my voucher balance if I switch?
Unused vouchers already issued generally remain usable with your provider, subject to your scheme's own rules. Check with your scheme administrator before serving the notice, not after.
My employer closed the scheme. Can I rejoin elsewhere?
No. A voluntary job change ends voucher eligibility permanently. A TUPE transfer is the only exception.