NIM02448 - Class 1: Vouchers - non-cash vouchers – exemptions – qualifying childcare vouchers from 6th April 2005 – definition of “qualifying childcare voucher” – conditions to be satisfied

Regulation 25 and paragraph 7 of Part 5 of Schedule 3 Social Security (Contributions) Regulations 2001

Sections 270A(2) – (5) and 318A, 318B and 318C ITEPA 2003

NIM02446 explains that up to £50 (£55 from 6th April 2006) per qualifying week per employment of a qualifying childcare voucher can be disregarded in calculating an employee’s earnings for Class 1 NICs purposes. A non-cash voucher (see NIM02413) is a “qualifying childcare voucher” if all the following conditions are satisfied:

Condition A

The voucher is provided to enable an employee to obtain care for a child who is:

• a child or stepchild of the employee at whose expense, either in full or in part, the child is maintained; or
• resident with the employee and is a person in respect of whom the employee has parental responsibility

Condition B

The voucher can only be used to obtain “qualifying childcare”

Condition C

The voucher is provided under a scheme that is open to:

• the employer’s employees generally; or
• generally to those at a particular location.

This condition is intended to encourage employers to provide childcare for all employees. If the scheme is only available to a particular group of employees – for instance, directors or senior managers – the condition will not be met. So the non-cash voucher cannot be disregarded in calculating the employee’s earnings.

The crucial point here is that the scheme must be open to all. But this does not mean that all employees have to take part in it. So simply because, for instance, an employee chooses not to take part in the scheme will not mean that the condition is not satisfied. The important point is that the employee can take part if they so wish.

For the meaning of “care”, “child”, “parental responsibility” and “qualifying childcare” for the purposes of conditions A and B, see NIM02449.