Changes to employer supported childcare from April 2011

HM Revenue & Customs (HMRC) has issued further guidance notes aimed at employers and employees on previously announced changes to childcare voucher schemes and directly contracted childcare which take effect from April 2011. The changes will restrict the tax and National Insurance (NI) exemptions available to new entrants to these schemes from 6 April 2011.

The notes provide more detail about the changes including welcome guidance on when the current and new rules apply and the requirement for employers to carry out basic earnings assessments. Some key points to note are that:

employees must have submitted an application to their employer on or before 5 April 2011, and be entitled to receive the tax and NI exemptions on that date, to fall within the current rules;
parental responsibility at the time employees join the scheme is required;
employees participating in their employer’s schemes before 6 April 2011 can take a twelve month break from receiving vouchers and still fall within the current rules; and
where the new rules apply employers must keep a record of the basic earnings assessment but are not required to submit this to HMRC.

The guidance notes can be found on HMRC’s website at:

http://www.hmrc.gov.uk/thelibrary/esc-qa.htm

Please get in touch with your usual Mazars contact or email us at contact@mazars.co.uk