Nursery World - Tax break could cost parents (1)

Thousands of working parents could find themselves out of pocket next year when the Government's much-heralded 50 a week tax and national insurance break on employer-supported childcare comes into operation.

The Inland Revenue conceded last week that nearly one in three basic rate taxpayers currently claiming exemption on the national insurance of a chunk of their salary when they forgo it in return for childcare vouchers could be adversely affected. Employers will be hit, too, as they lose on the savings they have been making on their national insurance contributions (NICs).

Anne Ross, corporate business manager of Accor Services, the biggest childcare voucher company in Europe, said that under these salary-sacrifice schemes, some people covered all or nearly all of their childcare fees with vouchers and claimed exemption on the associated national insurance. Some parents were switching as much as 1,000 a month of salary into vouchers, although the average amount sacrificed by Accor's clients was 400 to 500.

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