Home Advice for Parents & CarersChildcare Support Tax Credits and Universal Credit – if you use childcare vouchers

Tax Credits and Universal Credit – if you use childcare vouchers

Last updated: 22 Dec 2021

If you use Childcare Vouchers to help pay for childcare, and you also claim tax credits, you may still be able to get help with the costs which are not covered by the vouchers.  Take the amount of the vouchers away from your total cost of childcare when you tell the Tax Credit Office how much you pay. This will be taken into account in the childcare element of Working Tax Credit. When you tell the Tax Credit Office about your income, you report your income after any salary sacrifice scheme so that the value of the vouchers is disregarded. This is because you do not pay tax on the value of the voucher.

If you are claiming Universal Credit, that also includes help with childcare for working parents. You could still use childcare vouchers if you took the value of these off the costs you reported to the Department of Work and Pensions (for example, if your childcare costs are more than the eligible amounts in Universal Credit).

There is more information about tax credits, Universal Credit and childcare vouchers on the government’s childcare choices website. There is also a government scheme called tax-free childcare which allows parents to open accounts for their childcare costs which the government will top up. You won’t be able to use this scheme if you are in a salary sacrifice scheme for childcare vouchers, or if you claim tax credits or Universal Credit.

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