Tax advice of the week: A loophole in the childcare rules

Thanks to badly drafted rules, there's still a way for higher-rate taxpayers to receive the full amount of tax-free childcare.

From April, "the amount of tax-free childcare that higher-rate taxpayers can receive was cut by up to half", says Tax Tips & Advice. But thanks to "sloppy drafting of the rules", there is a way for higher-rate taxpayers to receive the full amount.

Basic-rate (20%) taxpayers can receive up to £55 a week in taxfree childcare vouchers, which represents a tax saving of £11 per week (£55 x 20%). So that higher-rate taxpayers don't make a tax saving greater than £11, the new rules reduce the amount of tax-free childcare vouchers they can receive.

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