NIM02471 and NIM02472 explain, respectively, how to calculate the exempt amount:
The following example illustrates those calculations.
Employee G has been employed by employer H since 1990. The
latter provides G with a year’s worth of qualifying childcare
vouchers with a face value of £6,000 (the chargeable expense;
see
NIM02461) as part of G’s April
earnings paid on 29th April 2005.
Step 1 – calculating the chargeable expense
The chargeable expense is an amount equal to the cost of
provision ie, £6,000.
Step 2 – calculating the exempt amount
Employer M 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:
The exempt amount is calculated thus:
E = £50. For the purposes of the 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.
The exempt amount is calculated as £50 x 26 =
£1,300.
But as the chargeable expense of £6,000 is more than the
exempt amount, only that latter amount may be disregarded. So
employer H must include £4,700 in employee G’s earnings
for the purposes of calculating the amount of Class 1 NICs due.
For examples showing the calculation of the exempt amount for
vouchers provided:
