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Childcare vouchers

One way of building employee loyalty is by providing help with childcare, either by assisting staff to locate suitable childcare or with funding. Childcare vouchers are a tax-efficient way for employees to cover childcare costs, and can be offered via a salary sacrifice arrangement. From 6 April 2011, only basic-rate taxpayers will receive full tax and national insurance (NI) relief on up to #55 a week. Tax relief will be restricted to #28 a week for 40% taxpayers and #22 a week for 50% taxpayers, when employees take up the benefit from this date. Existing users will be unaffected by the change.

John Woodward, group managing director at Busy Bees Employee Benefits, says: "A family, where both parents take childcare vouchers, can save over #2,000 in NI. That is very significant when you have got childcare costs that can be quite high."