Will tax bracket changes affect your childcare voucher entitlement?

tax bracket changes

Changes to childcare voucher entitlements and eligibility will come into effect from 6th April 2015. This may affect the earnings threshold that you fall into and, as a result, may alter the maximum amount you can take in childcare vouchers.

What do the tax bracket changes look like?

Following the Chancellor’s budget, there will be slight changes to the upper threshold of the ‘Basic Rate’ allowance for childcare vouchers, which could affect the amount you are entitled to take from your monthly salary. From the start of the tax year on the 6th April 2015 the upper threshold of the ‘Basic Rate’ for childcare vouchers will be increased from £41,865 to £42,386. This means parents earning between £41,865 and £42,386 could, without a change to their salary, fall into the ‘Basic Rate’ bracket, and see their childcare voucher entitlement rise from £28 to £55 per week (increasing their potential tax and NI saving from £623 to £933 per year).

Remember, if you still fall into the higher rate bracket and wish to take the maximum allowance of childcare vouchers, you could choose to increase your contributions to another tax-exempt benefit, such as a pension contribution. This will reduce the income that is considered for the basic earnings assessment, which may increase the amount of vouchers you are entitled to take. For more information on changes to childcare vouchers and whether your maximum voucher allowance will be affected, please speak to your HR team.


Maximum voucher allowance

Max savings per annum

Weekly Monthly Yearly
Basic   rate Up to £42,386





Higher   rate £42,386 to £150,000





Additional   rate Over   £150,000