Postby Mini Me » Fri Aug 26, 2016 6:25 pm
Hi,
HMRC are aware of our scheme and we do have the HMRC backing. The government published a consultation paper on 10th August 2016, which reviewed several Benefit In Kind salary sacrifice schemes. The government said the following regarding childcare schemes:
At Budget 2016, the government announced it was considering limiting the range of BiKs [Benefits in Kind] that attract income tax and NICs advantages when they are provided as part of salary sacrifice schemes. The announcement was clear that employer-supported childcare and the cycle to work scheme should continue to benefit from income tax and NICs relief when provided through salary sacrifice arrangements. These are benefits that the government specifically wants to encourage employers to provide.
As announced at Budget, following any change, certain exempt BiKs would
retain their existing tax treatment under Part 4 ITEPA with the same treatment for Class 1A NICs. These are:
•The exemptions for childcare vouchers in Chapter 6 at sections 270A to 270B
as long as the conditions in sections 318B to 318D were met;
•The exemptions for employer-supported childcare in Chapter 11 – section 318 and sections 318A to 318AA as long as the conditions in sections 318B to 318D were met;
•The exemption for cycles and cyclist’s safety equipment in section 244
Our scheme is a tax-exempt scheme, which is in accordance with the legislation that governs our scheme. Therefore, the salary sacrifice amount is fully exempt on tax and national insurance. Employers can request HMRC approval, and we do inform the Employer on the guidance for how this can be sought. The reason for HMRC approval is to ensure that the correct amount of tax is being paid, as a result of the Employee's salary sacrifice. It is not a legal requirement but some Employer's do seek HMRC approval for reassurance that they are paying the correct amount of tax.
The National Minimum Wage rule is a condition that the government states is required for all childcare salary sacrifice schemes. We inform parents of this requirement as our calculation works on the parent's nursery fees, we do not ask them for details of their salary. Therefore, the parent must confirm that the salary sacrifice amount does not take their salary below national minimum wage.