UK businesses have been warned they have less than 35 days to sign up to a Government salary-sacrifice scheme, before changes coming in to force in April will see their NI savings drastically reduced for higher and additional rate tax-paying employees.

The Government is to reduce the level of tax relief on childcare vouchers for higher and additional rate tax-payers who sign up to the scheme after 5 April. This means some working parents could lose around 50% of the tax and NI savings. For employers, this will mean a loss in savings made on NI of up to £241 per year, for any higher and additional rate employees joining a scheme after 5 April.

At the current level of £55 per week, and after NI goes up by one per cent in April, employers will save up to £402 per employee claiming the full amount of vouchers. To claim childcare vouchers, eligible employees must work for a company, which operates a scheme and any company, regardless of size or number of employees, can introduce childcare vouchers.

Julian Foster, managing director of Computershare Voucher Services (CVS) said: "Childcare costs continue to increase - up 4.8% on last year - and pay rises and bonuses are in short supply. This is coupled with the news that the higher rate tax bracket is to change, with an estimated 750,000 more employees expected to be bumped up to the higher rate bracket from April.

"As a result, the savings offered by childcare vouchers are more important than ever. In fact, providing a scheme is the equivalent of giving employees a pay rise and businesses can benefit too from further NI savings for higher and additional rate paying employees that sign up before 6 April. "

Amy Richardson, HR Officer at Chesterfield Borough Council said: "We decided to introduce a childcare voucher scheme before the changes take place in April as we knew some of our employees would be affected and stand to save less on their childcare each month.

"The scheme was so easy to set up and has not caused any unmanageable admin for my team. More importantly, our employees are happy that they can take advantage of the full savings that are available."