Changes to employer supported childcare
HMRC have produced two new question and answer guides on changes to employer supported childcare. One is a Q&A for employers; the other is for employees.
The publication of these guides follows the Government’s plans to phase out the tax and national insurance exemptions for childcare vouchers. The available tax exemptions will change for childcare vouchers which are provided after 5 April 2011.
The tax benefits for new scheme joiners after 5 April 2011 will be restricted for higher rate taxpayers. This change is intended to ensure that relief for higher rate taxpayers is limited to the same as basic rate taxpayers. This change should result in all employees receiving approximately the same level of income tax exemption, approximately £11 per week.
Employees who are already receiving vouchers will be able to claim tax and national insurance exemptions as before until they leave their employer’s scheme or are no longer eligible to participate.