The tax exempt amount for employer supported childcare will be increasing from £22 per week to £25 per week from 6 April 2013.
The draft Finance Bill 2013 confirms that secondary legislation will be introduced to increase the tax exempt amount for employer supported childcare (childcare vouchers or directly contracted childcare) from £22 per week to £25 per week for additional rate taxpayers who join such a scheme on or after 6 April 2011. This will ensure the value of tax relief available for employer supported childcare continues to be aligned to the value received by basic rate taxpayers. Separate secondary legislation will align the value of the national insurance contributions disregard for childcare vouchers with the tax treatment. These changes will take effect on 6 April 2013.
HMT ANNOUNCES TAX FREE CHILDCARE FOR 2.5. MILLION WORKING FAMILIES
19 March 2013
HM Treasury has announced tax free childcare for many millions of working families; so what does this mean for payroll?
Well what it means for payroll is potentially the end of employer supported childcare through offering childcare vouchers and salary sacrifice. The government intends to consult in late spring on the detail of these plans and the CIPP will be involved. The government will work with childcare providers and other third parties wishing to offer a service whereby the parents can elect to join a scheme directly and pay the providers in exchange for childcare vouchers. The nursery providers and or nanny agents may also decide to offer this service. This will then mean the providers will have a relationship with the government i.e. HMRC to receive the tax element back. The government proposes that a parent can, for each child have tax back on £1200 per annum so for example a parent contracts with a provider to pay £100 per month. Effectively they will pay £80pm and the provider will receive £20 from HMRC making the total £100. This scheme is likely to come into force from April 2015, but it is expected those employers who currently offer a child care voucher scheme can continue to do so up until that date i.e. after April 2015 anyone in the scheme can remain in the scheme, but no-one will be permitted to join it after that date and instead would need to join the new scheme directly with a provider. This will mean the end of salary sacrifice for new entrants after 2015. It is important to note, how the phasing out of the current employer supported schemes will happen, the rules around what and how the new scheme applies will be included in the consultation document expected later in the spring. The CIPP’s policy team will keep you informed when we receive further information.
Expense and Benefits - General
HMRC CONFIRM MONTHLY GUIDELINE RATE TO BE USED FOR HOME WORKERS
14 March 2012
HMRC’s 2 March Newsletter mentioned that the home working guideline rate has increased to £4 per week. This prompted a question about a monthly amount as the change means that it no longer rounds to a neat pound in the way it used to.
CIPP Policy News Journal
12/04/2013, Page 89 of 362
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