April #Tax Changes – The #Government is planning to reduce the level of #tax relief on #Childcare Vouchers for higher and additional rate tax-payers who sign up after 6 April 2011. Currently higher and additional rate tax-payers can save more than basic rate tax-payers. These changes will mean that all new recipients of Childcare Vouchers receive the same level of income tax exemption, which is approximately £11 per week. Basic rate tax-payers will not be affected by the changes.
What do I need to do?
If you are already in a scheme you don’t need to do anything, even if you are a higher or additional rate tax-payer. All parents currently using Childcare Vouchers will not be affected by the changes, as long as they remain in a scheme through their employer.
Tell a friend!
If you know someone who is a working parent and uses registered childcare but doesn’t use Childcare Vouchers, tell them about the changes to ensure they don’t miss out next Spring!
If a higher rate tax-payer has signed up to a Childcare Voucher scheme before 6 April 2011 they can save up to £1196* a year in tax and NI. However, if they register after 6 April 2011 they will see their tax and NI savings drop by around 50%, to approximately £624** a year. Basic rate tax-payers will continue to save over £900** a year on their registered childcare costs.
Contact your usual ABG contact partner if you require clarification on any of the above.