Could childcare vouchers affect an employee’s entitlement to tax credits?
Yes. These entitlements are based on a number of factors including hours worked, number of children and eligible childcare costs. Childcare costs paid via childcare vouchers cannot be taken into account for tax credit (Working Tax Credit or Child Tax Credit) purposes. Reducing an employee’s cash pay may also affect their entitlement. If an employee is unsure about how childcare vouchers will affect their tax credits they should contact the tax credit helpline on 0845 300 3900 or click here for HMRC guidance.
