Childcare Vouchers - Tax exemption to be retained

Written by Ian Congreave - Filed under: Expenses and Benefits, Vouchers and credit cards (C) on December 23rd, 2009

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In September 2009, the Prime Minister, Gordon Brown, announced plans to extend free childcare place, funded by removing the tax relief on the provision by employers of childcare vouchers. Details were promised in the 2009 Pre-Budget Report.

However, a few days before the 2009 Pre-Budget Report, in a letter sent to two MPs on 4 December, the Prime Minister responded to the considerable pressure to retain the tax exemption for childcare vouchers and confirmed that

the statutory tax relief provisions will be retained for both existing recipients of childcare vouchers and for new vouchers issued in the future, and
from April 2011, the tax relief will be restricted to the basic rate of tax in order not to disproportionately benefit higher rate taxpayers.

With regard to the Government’s plans to provide free childcare for two-year-old children, Gordon Brown said that “the government will continue to make progress to provide free part-time nursery places for all two year olds whose parents want them, albeit at a slower rate.”

Further information:

PM outlines plans for childcare vouchers