Many parents may be unaware they are at risk of losing out on the highest level of childcare voucher savings unless they act now, and here’s why... Parents currently using childcare vouchers may be aware that last April the Government introduced new legislation lowering the savings limits for new joiners of the scheme.
This legislation had significant financial implications, particularly for those higher rate taxpayers who wished to sign up and make use of the savings.
For parents already on the scheme their level of savings was unaffected, but their existing level was only protected provided that they ordered childcare vouchers at least once in every twelve month period.
So many parents could now be in danger of losing out - unless they act quickly.
And it is not just higher and additional rate taxpayers who stand to lose out – see how this issue could affect you.
Higher or additional rate taxpayer
If you are a higher or additional rate taxpayer who joined your employer's childcare voucher scheme before 6th April 2011, then while you remain eligible you have a right to a higher level of savings. This means you can receive up to £243 per month in childcare vouchers.
If you have ordered vouchers in the past twelve months, or do so now before the twelve months is up, then you will remain at this level for a further year. This will mean you are still able to make savings of up to £1,224* a year in tax and National Insurance payments if you are a higher rate taxpayer, or £1,516* a year if you are an additional rate taxpayer.
Basic rate taxpayer
For a basic rate taxpayer, you may also want to order childcare vouchers within this 12 month period to retain your protected rights. This means you will be able to receive childcare vouchers up to £243 per month if you ever become a higher rate taxpayer.
If you lose your protected rights then you can continue to receive childcare vouchers up to £243 per month, but ONLY while you remain a basic rate taxpayer. Remember, as a basic rate taxpayer you can still save up to £933 per annum in tax and National Insurance payments.
To order your vouchers, or if you would like any further information on this issue, then the team at CVS would be happy to help you. You can reach them on 0845 002 1111 (8am-8pm, Monday to Friday)