Childcare vouchers

One of the benefits employers have been able to offer to their employees has been childcare vouchers. They are free of tax and NIC as long as long there are within a certain threshold. The new budget has introduced changes however that introduce a new level a complexity.

The current situation (per parent) is as follows:

• Basic (20%) Taxpayer. Allowed £55/week vouchers, maximum annual gain £890
• Higher (40%) Taxpayer. Allowed £55/week voucher, maximum annual gain £1,170
• Top (50%) Taxpayer. Allowed £55/week voucher, maximum annual gain £1,460

For new joiners after 6 April 2011 it will be:

• Basic (20%) Taxpayer. Allowed £55/week vouchers, maximum annual gain £920
• Higher (40%) Taxpayer. Allowed £28/week voucher, maximum annual gain £610
• Top (50%) Taxpayer. Allowed £22/week voucher, maximum annual gain £590