Firms miss tax savings

Small to medium-sized enterprises are missing out on substantial tax savings with childcare vouchers, despite many businesses struggling in the recession.

Childcare vouchers, part of a government scheme, replace part of a parent's salary or are added as a bonus and are tax-free,

Businesses save money by avoiding National Insurance Contributions - up to £373 per employee per year - and the scheme doubles up as an employee benefit to help retain core staff.

SME take-up has grown from two per cent a year ago to 11 per cent, but this is still a meagre figure compared with 90 take-up among larger corporation. Iain McMath, managing director of voucher provider Sodexo Pass, says: 'It's critical in a recession that companies are ready fo when the economy improves.

'Companies have less flexibility in how much they can pay in salaries, possibly due top a wage freeze.

'But childcare vouchers give a clear signal that employers value their staff and are a way of giving extra money in the pockets of employees who pay for childcare.'

Justine Bennett, 38, from reading, both receives and provides childcare vouchers as a director of growing business Global Food Servi9ces Equipment. She said: 'I think employers expect it to be difficulty and time consuming to set up but it's really only a ten minute job.'

Source: Laura Shannon, Business Correspondent, Metro. Thursday, April 9 2009 Back