Budget 2010 - changes to childcare vouchers...
Although Gordon Brown made a u-turn on his original plan, there has still been a change to the scheme that will take effect as of 6th April 2011. The new rules will only apply to individuals who join a scheme on or after the 6th April 2011 and they will not apply to employees who are already in a scheme by that date. The maximum tax and NI free voucher value will be based on the employees basic earnings, after deducting personal allowance
- If the earnings are within the basic rate band, the employee is entitled to relief on (up to) £55 per week.
- If the earnings exceed the 40% tax threshold but not the 50% one, relief is given on £28 per week.
- If the earnings exceeds the 50% tax threshold, relief is given on £22 per week.
It was also announced in the recent Budget that the Government intends to legislate a Finance Bill to be introduced as soon as possible in the next Parliament to relax the conditions for exemption from the chargeable benefit for employer-supported childcare, provided in the form of childcare vouchers or directly contracted childcare. This means that employers do not need to exclude employees who are or close to the National Minimum Wage (NMW) for childcare voucher schemes operated through salary sacrifice.