By offering a childcare voucher scheme to employees before October 2018, an exemption for tax and national insurance could apply
Your employees could save as much as £933 per year in tax and national insurance (basic rate taxpayers), with help towards their childcare costs.
Time is running out for employers to offer and administer childcare voucher schemes for their employees, as from the 5th October this year the scheme will close to new applicants and the only choice for parents, not in an existing scheme, will be the new government “Tax-free Childcare” scheme.
Both parents are able to claim the tax and NI exempt amount and this includes directors.
Many small or medium sized companies may get lost in the HMRC guidance and believe that the only way to offer a voucher scheme is to outsource it to an external supplier and incur the associated administration costs.
However this is not the case for smaller employers.
The key criteria are as follows:
• That it is available to all staff
• The child qualifies (age conditions)
• The childcare provider is registered or approved
The limits in terms of vouchers employees can claim depends upon their level of income and this must be via salary-sacrifice. The claimable amounts per parent are:
• Basic-rate (20%) taxpayer: £55/week voucher, maximum annual tax/NI saving £933.
• Higher-rate (40%) taxpayer: £28/week voucher, maximum annual tax/NI saving £625.
• Top-rate (45%) taxpayer: £25/week voucher, maximum annual tax/NI saving £623.
We can assist in helping you to set up the scheme for employees and comply with the criteria, with simple step by step guidance. This is a great benefit in kind free incentive employers can offer that makes a huge difference to working families.