| In his speech to the
Labour Party Conference, the Prime
Minister, Gordon Brown announced an
extension of free nursery places, to be
financed by the withdrawal of the tax and
National Insurance (NIC) exemptions for
childcare vouchers. The proposal is that
the provision of free nursery places will
be extended to two year-olds (this would
be on top of the existing free childcare
available to three and four year olds). It
is expected that 250,000 children will
benefit from this by 2015/16.
However, the quid pro quo would be the
eventual withdrawal of tax and NIC
exemptions for 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).
Under the proposals, it appears that
from April 2011, employees who join an
employer-supported voucher scheme will not
be entitled to the current tax and NIC
exemptions. Those already receiving
vouchers will be unaffected until April
2015, when the exemptions for vouchers
will be withdrawn completely.
More details are expected in the 2009
Pre-Budget Report.
Internet link:
Childcare vouchers |
