Budget 2011 – Reduced Childcare Relief
The Government have confirmed that tax relief is to be restricted for higher earners who join employer-supported childcare schemes on or after 6 April 2011.
At present, basic rate taxpayers can receive up to £900 a year, whilst higher rate taxpayers and additional rate taxpayers can receive up to £1,200 and £1,500 of support through employer-supported childcare respectively. This change is designed to ensure that relief for higher rate taxpayers is limited to the same as basic rate taxpayers.
Higher rate taxpayers who are already receiving vouchers will be able to continue to claim tax and National Insurance exemptions as before until they leave their employer’s scheme or are no longer eligible to participate. The change only applies to individuals who join employer-supported childcare schemes on or after 6 April 2011.