EIM21995 - Benefits: exemptions for certain employer supported childcare from 6 April 2005: summary of the new provisions
Section 318A to 318D ITEPA 2003
The main changes in the exemptions for employer supported childcare from 6 April 2005 are summarised below:
Exemption for “Other Childcare”
A new tax exemption for registered childcare or approved home-childcare (other childcare) on the first £55 a week (£50 per week in the tax year 2005 to 2006) of childcare costs. This applies to childcare bought directly by the employer for the benefit of their employees. There is a matching exemption from Class 1A NICs on the first £55 a week (£50 per week in the tax year 2005 to 2006).
This change gives the limited exemption to arrangements under which the employer engages with a commercial nursery or approved child carer to provide care for the children of employees.
Section 318D and 270A ITEPA 2003
Exemption for “childcare vouchers”
A new tax exemption for childcare vouchers, similarly restricted to registered and approved childcare, covering the first £55 a week (£50 per week in the tax year 2005 to 2006). The Class 1 NICs exemption also applies to the first £55 a week (£50 per week in the tax year 2005 to 2006). See EIM16050 for further guidance.
Exempt amount for monthly paid employees
Sections 318A to 318D and 270A specify the exempt amount as a weekly value - £55 per week from 6 April 2006. For monthly paid employees, this converts to £243 per month (£55 × 53 ÷ 12).
Changes from 6 April 2011
For employees who join their employer’s scheme for the provision of childcare on or after 6 April 2011 the exemption may be further restricted (see EIM16053 and EIM22012).
Sections 318A, 318AZA, 270A and 270AA ITEPA 2003
From 4 October 2018, employer supported childcare schemes (directly contracted childcare and childcare voucher) are closed to new applicants. See EIM22017 and EIM16230.