October 2, 2009

Employer -Provided Childcare Voucher Schemes – Withdrawal of Tax/NIC Relief

On 29th September The Prime Minister announced that the tax and National Insurance relief in respect of employer-provided childcare vouchers will be withdrawn in order to fund the provision of free nursery places for two-year olds.

Full details will be provided in the Pre-Budget Report, probably in November, but the basic facts are as follows:

  • It will no longer be possible to provide childcare vouchers to employees free of tax and National Insurance Contributions to those who join employer childcare schemes from April 2011.  Currently, vouchers may be provided free of tax/NIC up to a limit of £55 per week, subject to certain conditions being met.
  • Where employees participate in existing schemes, they will still benefit from the tax/NIC exemption until April 2015 when the tax/NIC relief will be withdrawn completely.
  • The withdrawal of the relief will only affect childcare voucher schemes and not workplace nurseries where, again subject to certain conditions being met, tax/NIC relief is due without any limit.

Many local authorities and other public sector bodies provide vouchers via salary sacrifice arrangements and these changes will have a considerable impact.

If you would like further information then please contact John Harling on 07768 446381 or email johnharling@elysianassociates.co.uk

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