No liability to income tax arises on provision by an employer to his employees of qualifying childcare vouchers, except to the extent (if any) that the cash equivalent of the benefit exceeds £55 per week. One of the conditions for this exemption is that the vouchers are provided under a scheme that is open to all the employees or to all those at a particular location.
Where an employer’s scheme provides the vouchers as part of a salary sacrifice arrangement, employees on the National Minimum Wage (NMW) (or just above it) have to be excluded because the salary sacrifice would take them below NMW levels. Legislation is to be introduced to ensure that the exemption can still apply even if these lower-paid employees are excluded. The legislation will be backdated to 2005/06 when the exemption was first introduced.
There is also an exemption from income tax where the employer provides childcare directly rather than through vouchers. Again, retrospective legislation will preserve the exemption in cases where the childcare is provided via salary sacrifice arrangements and lower-paid employees are excluded.
Taxable Benefit Charges on Zero-Emission Vehicles and Low Emission Cars
From 6 April 2010 to 5 April 2015 there will be no benefit charge for employees provided with cars or vans which cannot produce any CO2 emissions. In addition and with effect between the same dates, there will be a reduced benefit charge applying to cars with a CO2 emissions figure of 75g per kilometre or less. To calculate the taxable benefit relating to such cars, the percentage applied to the car list price will be 5%.