Working Tax Credit and Childcare Voucher Schemes | Oxfordshire County Council

Working Tax Credit and Childcare Voucher Schemes

How to save money on your registered and approved childcare.

The two main ways to get help towards paying for registered and approved childcare are through:

  • the working tax credit scheme
  • childcare voucher schemes

The savings you might make will depend on things like your family’s income and how much your childcare costs are.

Childcare element of Working Tax Credit

If you work at least 16 hours a week, Working Tax Credit can top up your earnings and help with the cost of registered or approved childcare. If you have a partner, they must also work at least 16 hours a week or receive a qualifying benefit to get help with childcare costs. Tax credits are based on your family income, and will not take account of child maintenance paid to you.

Help towards childcare costs

You can get help towards the cost of registered or approved childcare. You can get 70 per cent of your childcare costs paid for, up to a maximum weekly amount of: 

  • £122.50 a week for one child; or
  • £210 a week for two or more children.

This childcare payment will be made to the person who is the main carer for the child(ren) in the family. Remember that you can’t pay for the same childcare with childcare tax credits if you use childcare vouchers.

Online calculator

Use the HM Revenue & Customs Tax Credit calculator. It will give you an estimate of the amount of tax credits you will receive from the date of your enquiry to the end of the financial year (5 April).

There is additional support to help you work out whether you are better off using childcare vouchers or the help with childcare costs available through Working Tax Credit. This help can be accessed via the HM Revenue & Customs Childcare Indicator.

How to apply for tax credits or find out more

To get an application form or to talk about your claim, phone the helpline on 0345 300 3900 from 8am to 8pm, Monday to Saturday.  For general information visit the HM Revenue & Customs website.

Child Tax Credit 

Child Tax Credit provides support for families who are responsible for children aged under 16 (under 19 where the child is studying full-time up to A-level or equivalent). There is an extra tax credit payment for children and young people who are disabled.

Childcare voucher scheme

Childcare vouchers are one of the ways in which employers can help their employees with the cost of childcare. 

For the employee, National Insurance contributions and tax do not apply to the first:

  • £55 a week for basic-rate taxpayers. The saving will be up to £933 a year
  • £28 a week for the higher-rate taxpayer. The saving will be £623 a year
  • £22 a week for additional-rate taxpayers. The saving will be £606 a year

Each employed parent can claim these exemptions, so you could receive twice the saving.

Childcare vouchers can affect the amount of tax credits you are entitled to. You should always compare your tax credit payments with the savings you would receive if you were to accept the childcare vouchers.

Useful tips

  • Before you sign up for a childcare voucher scheme, ask how it affects your pension scheme and other employee benefits.
  • You can save up vouchers and use them when you need to, for example, to pay for a holiday playscheme.
  • As the cost of your childcare vouchers are deducted from your salary (salary sacrifice), tax credits would be based on your new salary after childcare vouchers have been deducted. Make sure that you inform tax credits of your new household income.
Last reviewed
01 August 2016
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