Skip to content
  • 01228 534371

  • CONTACT US
SaintSaint
  • About us
    • Meet the Team
    • Office Locations
    • Join the Team
  • What We Do

    Services

    Starting a Business
    Finance Function
    Moving to the Cloud
    Xero
    Insolvency
    Plan for the Future
    Save Tax
    Save Time & Stay Compliant
    Year-end Accounts
    Management Accounts
    Payroll
    VAT
    Audits
    Business Planning
    Mergers & Aquisitions

    Specialisms

    Farming
    Charities
    Academies
    Tourism & Leisure
    In-House Bookkeeping

    Tax Specialisms

    Overview
    Inheritance Tax
    Trusts & Estates
    Capital Gains Tax
    Personal Tax
    Business Tax
    Property Tax Planning
  • Blog
  • Resources
  • Events
  • Success Stories
  • GET STARTED
Blog

Back to school – Childcare Vouchers or tax-free Childcare Account

Posted on September 7, 2022 by Jane Maclachlan

There continues to be poor take-up of the Government’s Tax-Free Childcare Accounts which provide a 25% subsidy towards the cost of childcare.

The system operates by topping up savings of up to £8,000 per child by 25%, potentially an extra £2,000 from the Government to spend on qualifying childcare. The scheme applies to children under 12 and the account can be used to pay nursery fees, breakfast clubs, after school clubs and registered childminders. In contrast childcare vouchers may be used to pay for childcare up to age 16. Despite the PAYE and NIC advantages not all employers provided childcare vouchers.

Tax free childcare accounts are available to both employees and the self-employed. To be eligible the parent generally needs to be working and earning at least the National Minimum Wage or Living Wage for 16 hours a week on average. For a 3 months period they need to earn at least £1,976 and they are not eligible if their adjusted net income is more than £100,000 a year.

INTERACTION WITH CHILDCARE VOUCHER SCHEMES

Tax-free childcare accounts will gradually replace childcare voucher schemes as no new schemes could be set up after 4 October 2018. Those within voucher schemes continue to be eligible until their child is aged 16, provided the employer is willing to continue operating the scheme. Many organisations provided the vouchers by way of salary sacrifice and there were tax and NIC advantages. However, with many employees working from home during the pandemic and the move to hybrid working many families found that they were not using all of their vouchers and chose to leave the scheme.

Note that the two schemes are mutually exclusive, and employers must stop giving their employees childcare vouchers with income tax and NIC relief if the employee informs them that they’ve started using the Tax-Free Childcare scheme.

The employer may need to stop or change the employee’s salary sacrifice arrangement and must also update the employee’s contract and their payroll software.

National Minimum Wage and Salary Sacrifice
We are hiring for a Full time Personal Tax Trainee – Carlisle Office
Recent Posts
  • What are the changes in payrolling benefits in kind for employers from April 2026? Comments Off on What are the changes in payrolling benefits in kind for employers from April 2026?
  • Hannah a finalist in Carlisle College’s Apprenticeship Awards Comments Off on Hannah a finalist in Carlisle College’s Apprenticeship Awards
  • Time is running out if you want to exit your company and pay lower rates of capital gains tax Comments Off on Time is running out if you want to exit your company and pay lower rates of capital gains tax
  • What is cash flow and how can you monitor it? Comments Off on What is cash flow and how can you monitor it?
  • What are the new tax implications for Double Cab Pick-Ups from April 2025? Comments Off on What are the new tax implications for Double Cab Pick-Ups from April 2025?
  • How will the new VAT rules on private school fees affect you from 1 January 2025? Comments Off on How will the new VAT rules on private school fees affect you from 1 January 2025?
  • National Insurance Category H for apprentices – What checks do employers need to carry out? Comments Off on National Insurance Category H for apprentices – What checks do employers need to carry out?
  • Community Amateur Sports Clubs state – What is it and are you still eligible? Comments Off on Community Amateur Sports Clubs state – What is it and are you still eligible?
  • Thinking of selling your furnished holiday let? Comments Off on Thinking of selling your furnished holiday let?
  • Budget Spotlight – what do the Inheritance Tax changes mean for me? Comments Off on Budget Spotlight – what do the Inheritance Tax changes mean for me?
Latest Tweets
Fetch Tweets: Could not authenticate you. Code: 32

© Copyright 2025 Saint & Co Chartered Accountants | Accountants in Cumbria and South West Scotland | Accountants in the Lake District. All Rights Reserved.

COOKIES POLICYCREDENTIALSSTANDARD TERMS OF BUSINESS DATA PROTECTION AND  PRIVACY POLICY
Cleantalk Pixel
  • About us
    • Meet the Team
    • Office Locations
    • Join the Team
  • Services
    • Starting a Business
    • Finance Function
    • Moving to the Cloud
    • Insolvency
    • Plan for the Future
    • Save Time
    • Xero
    • Year-end Accounts
    • Management Accounts
    • Payroll
    • VAT
    • Audits
    • Business Planning
    • Mergers and Acquisitions
  • Specialisms
    • Farming
    • Charities
    • Academies
    • Tax Specialisms
      • Inheritance Tax
      • Trusts & Estates
      • Capital Gains Tax
      • Personal Tax
      • Business Tax
      • Property Tax Planning
    • Tourism & Leisure
    • In-house Bookkeeping
  • Blog
  • Resources
  • Events
  • Success Stories
  • GET STARTED
  • CONTACT US
Subscribe to get tips and advice in your inbox every month
  • This field is for validation purposes and should be left unchanged.
In-house Bookkeeping Diagnostic
  • This field is for validation purposes and should be left unchanged.
Tax Diagnostic
  • This field is for validation purposes and should be left unchanged.
Farming Diagnostic
  • This field is for validation purposes and should be left unchanged.
Tourism & Leisure Diagnostic
  • This field is for validation purposes and should be left unchanged.
Academy & Charity Diagnostic
  • This field is for validation purposes and should be left unchanged.
Book a training session
  • This field is for validation purposes and should be left unchanged.
Book a meeting
  • This field is for validation purposes and should be left unchanged.