NIM02471 and NIM02472 explain, respectively, how to calculate the exempt amount:
The following example illustrates those calculations.
Employee Z has been employed by employer A since 2003. They
are paid on the last working day – Monday to Friday –
of each month. As part of their normal monthly earnings, employer A
provides employee Z with a qualifying childcare voucher with a face
value of £217. The cost to A of providing the voucher is
£217.
Employer A calculates the exempt amount using the formula E x
QW where:
(a) for which the employee has been employed by the secondary contributor during the tax year in which in which the qualifying childcare voucher is provided; and
(b) for which no other qualifying childcare voucher has been provided by the secondary contributor.
But as the qualifying childcare voucher is provided during the
period 6th April 2005 to 5th October 2005, then the figure in (a)
of QW above is taken as 26 (see
NIM02472).
Step 1 – calculating the chargeable expense
The chargeable expense is an amount equal to the cost of
provision - £217 (see
NIM02461).
Step 2 – calculating the exempt amount
The exempt amount is calculated thus:
E = £50. For the purposes of this example, the
administrative costs have been ignored.
QW = 26. The figure in (b) of QW is zero. As this is the
first payment of childcare vouchers in the tax year, there are no
other qualifying weeks for which such vouchers have been provided.
So the exempt amount is £50 x 26 = £1,300. As the
chargeable expense - £217 - is less than the exempt amount,
the chargeable expense is the amount that is disregarded is
calculating the amount of employee Z’s earnings for April.
For details of how to calculate the exempt amount:
