7 April 2017

Childcare vouchers Scotland

Some employers offer childcare vouchers, which allows users to save tax and national insurance on the value of the vouchers up to certain limits. Basic rate taxpayers can get up to £55 a week of vouchers free of tax and national insurance and higher rate taxpayers can take up to £28 a week of vouchers free of tax and national insurance.

Employers have to estimate the employee’s relevant earnings for the tax year to determine if they are a basic, higher or additional rate taxpayer for this purpose.

Following the introduction of the Scottish rate of income tax, the Scottish Parliament have set the Scottish income tax rates and thresholds for the 2017/2018 tax year. The higher rate threshold will be different in Scotland to the rest of the UK.

However, as childcare vouchers are not devolved to the Scottish Parliament, the thresholds mentioned above (basic, higher and additional) are based on UK thresholds and not the Scottish thresholds even if the recipient of the vouchers lives in Scotland.

This means that the same limits apply for all employees in the UK in receipt of childcare vouchers no matter where they live.