From today, UK businesses have just 40 days left to sign up to a childcare vouchers scheme before changes coming in to force in April will see their NI savings drastically reduced for higher and additional rate tax-paying employees. We’ve mentioned before and I’m sure you’re all well aware that the Government will reduce the level of tax relief on childcare vouchers for higher and additional rate tax-payers who sign up to the scheme after 5 April and it means that some working parents could lose around 50% of their tax and NI savings.
It’ll mean a loss for employers too as they could miss out on up to £241 per year in NI savings for any higher and additional rate employees joining a scheme after April 5. But, if higher and additional rate employees sign up now to claim the maximum £55 per week, employers will save up to £402 per employee claiming the full amount of vouchers once NI increases by 1% in April.
Childcare costs are continuing to rise - up 4.8% on last year - and pay rises and bonuses are in short supply. This is coupled with the news that the higher rate tax bracket is to change, with an estimated 750,000 more employees expected to be bumped up to the higher rate bracket from April.
As a result, the savings offered by childcare vouchers are now more important than ever and any company, regardless of size or number of employees, can introduce childcare vouchers for their employees.
We’ve already seen an increase in employers and parents eager to beat the deadline and we are urging all businesses to act now to ensure they get the highest possible savings available for them and their employees, by registering with a scheme before April 6.
Chesterfield Borough Council has just signed up for CVS childcare vouchers. HR Officer, Amy Richardson said: “We decided to introduce a childcare voucher scheme before the changes take place in April as we knew some of our employees would be affected and stand to save less on their childcare each month.
“The scheme was so easy to set up and has not caused any unmanageable admin for my team. More importantly, our employees are happy that they can take advantage of the full savings that are available."