EIM16058 - Vouchers and credit cards: childcare vouchers: example

Section 270A ITEPA 2003

Example: Paul and Charlotte , aged 3 and 6 respectively, live with their grandmother, in the week and their father alternative weekends. Their mother died 2 years ago. The father pays £120 per week to the children’s grandmother for their maintenance. Paul goes to a registered childminder 5 mornings a week. Paul’s grandmother pays the childminder £60 a week. She pays the childminder with childcare vouchers, which her employer has given her as part of her remuneration. The grandmother does not know about the salary arrangements for the other 20 people who work in her office. Charlottes sometimes attends an out of school club, which costs her grandmother £8 a session.

Answer:

• The father is not eligible for exemption, as his employer does not provide either type of childcare.
• As the grandmother’s employer provides childcare vouchers, exemption may be available for these. Exemption is not available for the out of school club as the employer is not involved. Also exemption cannot be claimed for both childcare vouchers and childcare provision. (See EIM16057).With the childcare vouchers £55 per week (£50 per week in year 2005-06) of these are exempt providing all of the following conditions are met:

Condition 1 – child: As the grandmother has parental responsibility for Paul and he lives with her, this condition is met.

Condition 2 – qualifying childcare: As the childminder is registered, this condition is met.

Condition 3 – availability: It will need to be checked whether the choice of receiving childcare vouchers is available to all of the grandmother’s colleagues at work. If it is then this condition is met.

The limit of the exemption is £55 per week (£50 per week in year 2005-06). Any amount over the limit of £55 per week is chargeable.