If you are a higher rate taxpayer, or may become one in 2011/12 there is a last opportunity over the next few weeks to enrol into childcare voucher schemes and maximise your tax free allowances.
The current regime allows employees to claim up to £55 per week as exempt from PAYE and National Insurance. So, if you are a higher rate tax payer you can save more money.
However, from 6 April this year the rules change. As an employer you will need to carry out a 'basic earnings assessment' on employees joining the scheme and higher rate employees will receive the same level of income tax exemption as lower salaried employees. This is appoximately £11 per week.
Co-operative Employee Benefits is one organisation that is advising its employees to join the scheme now to avoid missing out.
Tracy Wilson, group operations manager at Co-operative Employee Benefits, said: 'I would strongly advise any employees who fall in to the higher or additional tax rate brackets to sign up for the childcare voucher scheme now.'
She added: 'Those who sign up before 6 April 2011 will not be affected by the changes and so can continue to benefit from the current exempt limits, as long as they remain continuously within the same scheme.'
Working couples are entitled to claim the benefit twice, meaning the tax relief is worth more than £1,000 per year.
More information is available from HM Revenue & Customs.
