Changes to employer supported childcare from April 2011

RSM Tenon report that from April 2011 there will be changes to Employer Supported Childcare that will affect some employees.

If you decide to join your employers scheme on or after 6tApril 2011 the amount of tax you can save will be limited to the equivalent of the 20 per cent basic rate. Higher rate taxpaying parents will pay more tax if they join the scheme on 6th April than if they do so on 5 April so don't wait.

The changes outlined below will only apply to you if you join your employer’s scheme from 6 April 2011. If you have already joined your employer’s scheme on or before 5 April 2011 you will not be affected by these changes unless you leave the scheme or your employment.

At present if you are a higher earner you receive a greater amount of tax saving than those who pay tax at the basic rate. These changes will mean that all recipients of childcare vouchers or directly contracted childcare receive the same level of income tax exemption, which is approximately £11 per week.

These changes only apply to childcare voucher schemes and directly contracted childcare. There are no changes with regard to workplace nurseries. If you and/or your work force want to lock in their tax savings on childcare vouchers they need to act now.