EIM16055 - Vouchers and credit cards: childcare vouchers

Section 84(1)(ab) ITEPA 2003

For a description of the points to consider in a case involving vouchers or credit tokens see EIM16030.

A childcare voucher is defined as a voucher, stamp or similar document or token, which is to be used to buy childcare.

This voucher does not need to be exchanged. It could be that the childcare voucher is physically handed over when paying for the childcare services. It could be that childcare is paid for using an electronic version of the childcare voucher. Exceptionally a childcare voucher may be cashed. An example of when this might occur could be the death of the child for whom childcare vouchers are provided. As the primary purpose of the childcare voucher is to pay for childcare services not that it is exchangeable for cash, the voucher may be accepted as a non-cash voucher. If the voucher is exchanged for cash, then the employer must apply tax and NIC to this cash payment.

See also EIM16057 for the definition of childcare vouchers that qualify for the limited exemption from 6 April 2005.

If the employee can give up vouchers and obtain a higher salary see EIM21990.