Employer-supported childcare schemes
HMRC have published new guidance on the changes to employer-supported childcare schemes. The tax benefits for new scheme joiners after 5 April 2011 is restricted for higher rate taxpayers. This change is designed 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.
The guidance published by HMRC has been specifically written to cover the period from 6 April 2011 until the Finance Act 2011 receives Royal Assent. HMRC have committed to publish further updated guidance after the Finance Act receives Royal Assent.
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.