Government urged to make childcare vouchers tax-free

Employers and charities are urging the Government to make childcare vouchers
tax free to establish a more affordable system and help parents get back into
the workforce.

The UK currently lags behind the rest of Europe on childcare provisions, and
employers are concerned that crucial skills are being lost because mothers are
unable to return to work after having children.

Across the UK, there is only one childcare place for every five children,
and those that are available are the most expensive in Europe.

Childcare vouchers are currently free from National Insurance, but many
employers don’t provide them to staff because of the administrative burden of
calculating the tax.

It is hoped that Gordon Brown will make the vouchers tax-neutral in his
pre-budget speech on 10 December.

Bill Dykes, HR director of Select Appointments, said tax-free vouchers would
be a cost effective way for employers to retain skilled parents in the

"It’s a way to support staff returning to work and to help employers
retain skills they can’t afford to lose. It’s a financially viable way to
encourage employers to get people back to work," he said.

Stephen Burke, director of childcare charity The Daycare Trust said there is
currently a lack of affordable options for working parents.

"We’re hoping the Government will make vouchers tax exempt as there has
been consultation on the subject. As long as the tax allowances are simple to
introduce, then more employers will start looking at childcare vouchers,"
he said.

Voucher supplier Sodexho Pass has pledged to donate part of its fee to The
Daycare Trust and is also encouraging employers to donate the money they save.

By Ross Wigham

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