More parents eligible

for Childcare Vouchers

My Family Care Vouchers reports on the recent Budget announcement regarding the government's intention to introduce a Finance Bill in the next Parliament to relax the conditions for exemption from the chargeable benefit for employer-supported childcare, Childcare Vouchers, or directly contracted childcare.

This means employers no longer need to exclude employees at or near the National Minimum Wage (NMW) from schemes provided through salary sacrifice arrangements.

The measure introduces an exception to Condition C of section 270A of the Income Tax (Earnings & Pensions) Act 2003, in the case of relevant low-paid employees where the childcare voucher scheme is provided through a salary sacrifice arrangement.

Section 318A of ITEPA sets an equivalent condition in respect of directly contracted childcare. Again, the measure introduces an exception to Condition C in the case of relevant low-paid employees where the directly contracted childcare is provided through a salary sacrifice arrangement.

Informal/non registered childcare

It should be remembered though that many employees who are lower paid are more likely to use informal/non-registered childcare for which Childcare Vouchers may not be used or they will already be receiving substantial tax credits based on the childcare they pay for. This means that this change in legislation may not benefit as many additional employees as it would appear at first glance.

My Family Care Vouchers

If you're a My Family Care Vouchers client then use your client log-in to access our online calculators to determine whether you'll be better off with Childcare Vouchers and/or tax credits.