Working parents should take advantage of childcare vouchers offered by their employer, before the Government’s tax changes affecting the benefit come into effect in April 2011, according to Origen Financial Services.
Origen’s annual employee benefits survey found 70% of employers offer childcare vouchers.
The changes to childcare vouchers announced in the June 2010 budget by the coalition government will vastly reduce the potentials savings for higher-rate and top-rate taxpayers.
From 6 April 2011, the available tax relief on childcare vouchers for higher-rate tax payers will reduce from £55 per week to £28 – equating to a reduction in saving from £1,170 a year to £610.
Meanwhile,for top rate tax payers this will reduce to £22 per week – equating to a reduction in savings from £1,460 a year to just £590.
Warren Page, director, client services at Origen Financial Services, said: “Childcare vouchers are widely offered by UK employers to their employees. With the new regulations taking effect from April 2011, working parents now have a ‘use it or lose it’ window of opportunity, as new employees joining before this date, regardless of tax band, will still receive the current voucher allowance.
“Offering a good benefits package to employees is a great way of attracting and retaining the best staff. Family-friendly benefits that offer tax breaks, such as childcare vouchers, are crucial in providing support to working parents.
“The 30% of employers polled – which do not currently offer childcare vouchers as a benefit – should seriously consider whether this benefit would be appropriate for their workforce while the higher tax relief is still available.”
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