Government revises decision on childcare voucher tax breaks

The government has revised its decision to phase out tax and national insurance breaks on childcare vouchers.

The relief will now be applied to all vouchers at the standard income tax rate of 20%. Higher earners will still be entitled to the basic-rate tax saving.

Ant Donaldson, a senior specialist in employee benefits at power firm E.On, welcomed the change. “What came through very strongly after the government made its initial change proposals was a lot of people really do rely on the tax breaks they get through childcare vouchers.

“Although it is only talking about having basic-rate tax relief, that clearly does address the issue. I think the government has listened, which is great.”