Tax Relief for Childcare

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January 18, 2018 at 9:28 am #431003
ironbutter
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Please help me understand this……

For an employer supported childcare the benefit limit for Basic Rate Tax Payers is 55pounds/week….

(tax relief is therefore 55*20%=11pounds). What is the meaning of the statement in brackets? How does it relate to this context?

thanks!
January 18, 2018 at 2:26 pm #431074
Tax Tutor
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The tax saving (relief) per week of a £55 exemption to a basic rate taxpayer is £55 @ 20% = £11
If the employee was taxed on this, their income would be £55 per week higher and be taxed at 20% giving an increased liability of £11.
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