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Employer supported childcare – New HMRC guidance

Posted by: edwinsmith on October 27th, 2011

HM Revenue & Customs (HMRC) has issued new guidance on reduction in tax relief from 6 April 2011 for employers who provide childcare schemes.

There are two changes:


  • To restrict the tax relief for employer-supported childcare to the basic rate of income tax.


  • To prevent employers providing childcare via salary sacrifice arrangements which would bring the employee’s pay below the National Minimum Wage (NMW).



“Employer-supported childcare” means employer-contracted care (where the employer arranges directly with a registered provider to offer qualifying childcare to employees) and childcare vouchers provided to the employee by the employer for qualifying childcare. The changes do not affect the provision of workplace nurseries, which continues to be tax-free.

The previous rule was that qualifying employer-supported childcare was exempt from income tax and disregarded for NIC for the first £55 a week (so 50% taxpayers get relief at 50%). This rule still applies for those already in an employer childcare scheme at 6 April 2011.

The new rules apply from 6 April 2011, to employees joining a scheme on or after that date. There are some quite complicated rules about when an employee is regarded as already in a scheme at 6 April 2011, and the guidance explains these.

The new restriction is achieved by reducing the weekly exempt (or disregarded) amount: this is £55 for basic rate taxpayers (i.e. no change from before), £28 for higher-rate and £22 for additional-rate taxpayers. The result is that all employees get tax relief of £11 a week.

To decide which exempt amount to apply, the employer has to make an assessment of each employee’s earnings at the start of the year. Indeed, failing to do this will invalidate the scheme for tax relief purposes. There are detailed rules about what earnings and tax allowances to include in making this assessment, which are explained in the guidance.

Where the employer operates a salary sacrifice scheme for childcare provision, employees cannot take part if it would reduce their remaining earnings below the NMW. Employers are allowed to exclude such employees from the childcare scheme without affecting the availability of tax relief for others in the scheme (the general rule being that the scheme must be open to all employees).

Filed under: PAYE

VAT Flat Rate Scheme – No Need to Include Bank Interest

Posted by: edwinsmith on October 25th, 2011

After a recent case, VAT Notice 733 has been updated to state that bank interest is no longer required to be included in the VAT turnover when calculating VAT under the VAT Flat Rate Scheme.

If you have included bank interest in your VAT Flat Rate turnover you can make a claim for a refund of the VAT paid within the last four years.  Please contact us for any advice.

Filed under: VAT

Reminder – new penalties for self assessment from 6 April 2011 and tax return deadlines

Posted by: edwinsmith on October 10th, 2011

New penalties for late filing of a tax return and late payment of tax apply for tax years 2010/11 onwards. This applies to personal, trust and partnership tax returns.

Please see our previous article on New penalties for self assessment from 6 April 2011 for more information.

Penalties will apply for late filing of returns even if the tax has been paid. The deadline for completing a 2011 paper return is midnight on 31 October 2011 and to file an online return is midnight on 31 January 2012. However, if you owe tax of less than £2,000, have income taxed under PAYE and file your online return by 30 December 2011, you can ask for the tax to be collected through PAYE in 2012/13.

The HMRC website has information on whether you need to complete a return.

Please contact us if you would like us to help you complete your return.

Filed under: Tax

Annual return UK SIC codes are changing from 1 October 2011

Posted by: edwinsmith on October 3rd, 2011

From 1st October 2011, Companies House will adopt the 2007 version of the UK SIC (standard industrial classification) codes. The UK SIC codes are used to classify company business activities.  All companies filing an Annual Return with a made up date on or after 1st October 2011 will need to use the new 5 digit codes.  When filing your Annual Return via WebFiling you will be asked to select a new 5 digit SIC code. A SIC code conversion table is available from Companies House. Also Companies House have published a full list of the 2007 SIC codes.

 If you require further information, please contact us.

Filed under: Company Secretarial