October 2009

Childcare Vouchers - Withdrawal of Tax Exemption

The government proposes to withdraw the tax exemption for childcare vouchers. Currently all employees can receive tax free vouchers up to £55 per week to cover the cost of nursery or childminding care.

There will be no exemption at all for childcare vouchers that are first provided after 5 April 2011.

Employees who are already receiving vouchers on 5 April 2011 will continue to enjoy the tax and national insurance exemption until 5 April 2015.

Employers and employees have therefore until 5 April 2011 to start using vouchers which can provide tax savings where the employee exchanges wages for vouchers.