| Gordon Brown has revised
his proposal to withdraw the income tax
and NI exemption on employer-provided
childcare vouchers.
Currently employees are exempt from tax
and NIC on childcare vouchers provided by
employers. The exemption is available on
the first £55 a week of vouchers per
employee, as long as a range of conditions
are met. Any excess over the £55 is liable
to tax and to NIC (both employees’ and
employers’ contributions).
In a change to the original
announcement Gordon Brown has now said:
‘I have already made clear that no
family currently in receipt of tax relief
for their childcare vouchers will see any
change in the support they receive. But
following our discussions I can now also
say that we will retain tax relief for new
childcare vouchers issued in the future.
However, there still remains a concern
that a disproportionate benefit is
accruing to higher rate taxpayers. So in
order to ensure that this tax relief is
given on a fairer basis to all families,
we will ensure that all taxpayers get the
same income tax relief as basic rate
taxpayers do currently. This will take
place from April 2011 and will not affect
those receiving vouchers issued before
that date.’
Under the revised proposals it appears
that from April 2011, vouchers will not
attract the full current tax and NIC
exemptions as their tax relief will be
restricted to the basic rate. Higher rate
taxpayers will be liable to tax on the
vouchers at their marginal rate of tax of
20%, being the difference between basic
rate of 20% and the higher rate of 40%.
Vouchers issued prior to April 2011
will be unaffected by the change.
Internet link:
Number 10 website |
