Government plans to scrap tax relief on employer-supported childcare vouchers could cost the sector more than £100m a year, according to figures seen by CYP Now.
The leaked data from HM Revenue and Customs (HMRC) shows parents spent almost £722m on vouchers last year. But, according to the government's own costing, plans to offer free childcare for an extra 250,000 two-year-olds at the expense of the voucher scheme would only put £620m back into the sector, creating a shortfall of £102m.
Parents can currently sacrifice up to £243 a month of their salaries tax-free in exchange for childcare vouchers. The added incentive for employers to offer the vouchers is that they do not have to pay National Insurance on the money.
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