As the UK tax authority clamps down on employers that have incorrectly claimed tax exemption for employees’ nursery fees (Financial Times 17/07/24), employer tax partner at RSM UK, Susan Ball said: “There could be potentially large tax and national insurance liabilities for both employers and employees as a result of this clampdown. If a nursery scheme should have been taxable and the employer has not declared this as a benefit in kind, on their P11D form or via payroll. “HMRC can go back up to six years to check whether tax exemption has been claimed when it shouldn’t have been. There may be interest and penalties going back several years, so the impact of this could be significant for many.
“This has implications for employees too, who will not be happy if they are landed with an unexpected tax bill because their employer doesn’t pick up the liability.”
“Employers who offer such schemes should act now to review their position. Those that have incorrectly claimed the tax exemption should make a voluntary disclosure to HMRC as soon as possible.
“The new Labour government may want to consider what additional support they could offer to parents. One option could be reopening the childcare voucher scheme to new applicants, which could be done fairly rapidly if they wanted to. Any support with childcare costs does enable people to get back into work or increase their hours which would boost productivity, a key aim of this government.”
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