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Paying for childcare

Types of support

Childcare vouchers

Childcare vouchers can help you to pay for your childcare and are one of the ways that your employer can help to support you.

Weekly amounts of childcare vouchers (as specified below) are exempt from tax and National Insurance Contributions, so they can help you to save money with your childcare fees as long as all the qualifying conditions are met.

  • For basic rate tax-payers, the first £55 per week is exempt from tax and national insurance contributions.
  • For higher rate tax-payers, the first £28 per week is exempt from tax and national insurance contributions.
  • For additional rate tax-payers, the first £22 per week is exempt from tax and national insurance contributions.

Based on the exemption amount of £55 per week, each employed parent can claim the exemptions, meaning a 2 parent family could save over £1,800. The exact amount that you can save depends on individual circumstances.

You can use your childcare vouchers to 'pay' for registered or approved childcare. The childcare provider will then cash in the value of the voucher from the childcare voucher company (or your employer, if they are running the scheme themselves). You can receive any amount in childcare vouchers from your employer, but only the amounts listed above are free from tax and National Insurance Contributions.

Directly-contracted childcare 

Directly-contracted childcare is when your employer has a direct contract with your childcare provider and pays for some or all of your childcare. The exemptions are the same as with vouchers. This arrangement may suit smaller employers that do not want to use a childcare voucher scheme.

Workplace nurseries

Some employers provide workplace or in-house childcare provision on their own premises. If your employer provides a workplace nursery or holiday playscheme all of your costs for sending your child there are exempt from tax and National Insurance Contributions. You are also able to claim childcare vouchers or directly-contracted childcare or a combination of the two on top of the workplace childcare exemption.

Further information about this is available in our factsheets.