Benefits for your employees which won’t cost you a penny!

Thu 18th Mar 2010

As an employer, you can provide assistance to your employees in relation to child care costs without incurring any expense to your business. In fact, it will result in your salary costs being reduced and increased morale in your workplace. Further, it will encourage employees to attend work and giving your business a lower absenteeism rate.

An employer can provide child care vouchers with a tax free limit of up to £55 per employee, per week. The scheme is normally offered via salary sacrifice arrangements. This is where an employee agrees to forego some of their salary in exchange for the child care vouchers.

The cost of the vouchers is deducted at source and the salary paid to the employee will be reduced in accordance with the value of the child care vouchers. Therefore there is a significant tax benefit to the employee, as well as a reduction in their national insurance contributions.

There will be some changes to the tax treatment of the child care voucher scheme in April 2011 which will only affect employees paying higher and additional rates of tax who join the salary sacrifice scheme after 6 April 2011. The tax changes will not affect basic rate employees, or employees who join the scheme prior to 6 April 2011.

Employers will need to bear in mind that from April 2011 it will be a requirement to assess employees’ basic employment earnings to ensure they are receiving the statutory minimum wage before any commission or bonuses are awarded. If the child care voucher scheme is offered on a salary sacrifice basis, the assessment will need to be carried out after the deductions have been made from the employee’s salary to ensure they are being paid the minimum wage.

Thu 18th Mar 2010

Related Services & sectors

Get in touch

Call us on 0800 328 3282, or complete the form below and we’ll get back to you as soon as possible.

Name(Required)
This field is for validation purposes and should be left unchanged.

Search News & Events

Popular

Pattern

Changes to Paternity Leave in April 2024: What do you need to know?

As of 6th April 2024, paternity leave will be changing to reflect a shifting attitude…

Read more

Pattern

Suspecting a Power of Attorney of financial abuse: what can you do?

What steps should you take if you suspect someone is committing financial abuse as a…

Read more

Portfolio Builder

Select the legal expertise that you would like to download or add to the portfolio

    Download    Add to portfolio   
    Portfolio
    TitleTypeCVEmail

    Remove All

    Download


    Click here to share this shortlist.
    (It will expire after 30 days.)