Archive for June, 2012

Childcare voucher petition

Since my blog post about childcare vouchers earlier this week, I’ve heard from the people at Busy Bees Benefits, one of the companies that offer childcare voucher schemes to employers, like those I described in my blog post. They told me about a petition they have launched to increase the value of vouchers that could be received by parents tax-free.

As I described in my previous post, the value of vouchers that can be received tax-free is currently £2,915 per year, or £55 per week. This limit has been the same since 2006, but many parents are finding that the cost of childcare has increased in the years since then so the vouchers do not cover as much of their childcare fees. Busy Bees Benefits are trying to get this limit raised to £75 per week (£3,975 per year), and the first step is to get 100,000 signatures on the petition so the proposal can be debated in Parliament. Increasing the tax-free limit would allow parents to sacrifice more of their salary in exchange for vouchers, therefore saving more tax and National Insurance.

More details are available on the Busy Bees Benefits childcare voucher petition page, where you can learn more and sign the petition if you want to back the change!

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Thursday, June 14th, 2012 Income Tax, National Insurance No Comments

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Childcare Vouchers added!

The Salary Calculator has been updated with a new option for Childcare Vouchers. Some employers offer employees the opportunity to have some of their pay in the form of vouchers which can be exchanged with accredited childcare providers instead of cash. These vouchers can be taken tax-free, saving the employee money.

Childcare vouchers are subtracted from your salary before tax and National Insurance, like pension contributions. However, there is a limit to the amount that can be taken tax-free each year – for the current tax year, this amount is £2,915. You can receive childcare vouchers above this amount, but you will not get the tax benefits. If you signed up for the voucher scheme before 6th April 2011, this limit applies no matter how much you earn. However, if you joined the scheme after this date and pay tax above the 20% Basic Rate, the amount you can receive tax-free is reduced. For those paying 40% tax (typically earning £42,475 or more), the tax-free allowance for childcare vouchers is £1,484 – and for those paying 50% tax (earning over £150,000) it is just £1,166.

To see how childcare vouchers can affect your take-home pay, head over to The Salary Calculator and enter your salary, along with the value of vouchers you receive each month. If you joined the scheme before 6th April 2011, tick the box to this effect. Enter the rest of your details and click Go! to see the results.

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