Changes to Childcare Vouchers

02 Dec 2010

Level of tax relief will be reduced from 6 April 2011

From 6 April 2011, the Government is planning to reduce the level of tax relief on Childcare Vouchers for higher and additional rate tax-payers.

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.

The University takes part in the Childcare Vouchers scheme, which means that members of staff are able to request non-taxable and exempt from National Insurance (NI) contribution Childcare Vouchers up to the value of £55 per week (£243 per month).

The vouchers can be used to pay for registered childcare such as day nurseries, childminders, before and after school clubs and holiday schemes. Using the vouchers, parents can make potential savings of between £1,196 and £2,392 per annum on the cost of the childcare. The University scheme is administered by Computershare.

What should I do if I already receive Childcare Vouchers?

If you’re already in the 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.

What if I’m a working parent but not in the scheme?

If you’re not in the scheme, then you can still join. If you are a higher rate tax-payer, you should try to sign up to the Childcare Voucher scheme before 6 April 2011 so you could save up to £1,196* a year in tax and NI.

However, if you register after 6 April 2011, you will see your tax and NI savings drop by around 50%, to approximately £624** a year. If you’re a basic rate tax-payer, you will continue to save over £900** a year on your registered childcare costs.

You can find out more about the changes:

• online at Computershare Voucher Services
  or
• by calling Computershare on Freephone 0845 002 1111

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* Maximum amount of relief available in the current financial year (2010-2011) for a higher rate tax-payer, subject to individual circumstances. For use as general guidance only.

** Subject to individual circumstances.