From 6th April 2011 there will be changes to Employer Supported Childcare that will affect employers who operate a childcare voucher scheme and/or directly contracted childcare.
Under current arrangements, employees on higher earnings receive a greater tax saving than those who pay tax at the basic rate. The change evens out the amount of tax saving available for all employees regardless of the rate that the individual pays tax.
These changes will mean that anyone who joins an Employer Supported Childcare scheme from 6th April 2011 will receive the same level of income tax exemption, which is approximately £11 per week.
Any employee who already participates in your scheme will not be affected. They will retain their current level of tax savings until they leave your scheme or are no longer eligible to participate – for example if their child no longer receives qualifying childcare.
There are considerable tax advantages for higher rate tax payers who pay for childcare to have a scheme in place before 5th April 2011. If you would like any further information or assistance in setting up a scheme please give us a call on 01733 371180.