Budget 2010 – Employer supported childcare
New legislation is to be put into place which will relax the conditions for exemption from the chargeable benefit for employer-supported childcare, provided in the form of childcare vouchers or directly contracted childcare. The new measure will have retrospective effect for the tax year 2005-06 and subsequent tax years.
The legislation is designed to stop the practice whereby employers exclude low paid employees from schemes provided through salary sacrifice arrangements. Such employees cannot normally benefit from salary sacrifice arrangements if the result would be to push their income below the minimum wage rates.
The measure introduces an exception which will allow low paid employees to benefit from salary sacrifice arrangements for childcare vouchers or directly contracted childcare.