The Chartered Institute of Taxation (CIOT) is calling on Government to reconsider its decision to go ahead with changes to the tax relief available on employer-supported childcare.
The Government confirmed today that proposals to restrict the tax relief available on employer-supported childcare schemes would proceed. Legislation will be included in the Finance Bill 2011 to restrict the level of tax relief available to higher rate and additional rate earners who join schemes from 6 April 2011.
Colin Ben-Nathan, Chairman of the CIOT’s Employment Taxes Sub-Committee, commented:
“We are disappointed that the Government has not listened to our concerns that this proposal will complicate matters and introduce a significant additional burden on employers.
“The mechanism proposed for restricting tax relief on employer-supported childcare is, in our view, impractical and depends on an employer’s ‘back of the envelope’ calculation of ‘basic’ earnings. The employer is required to estimate whether the employee will be a higher rate/additional rate taxpayer in the coming tax year, and the employee has no right of appeal.
“We are also concerned that this will put the employer in a difficult situation and impact on their relationship with their employee.
“Although the change only affects higher/additional rate taxpayers, employers will have to undertake the process of estimating employment income for all employees joining a ESC Scheme from 6 April.”
Technical Team
23 March 2011
