Expenses and benefits: childcare

1. Overview

As an employer providing childcare to your employees, you have certain tax, National Insurance and reporting obligations. Most workplace nurseries and childcare voucher schemes are exempt.

Employer-supported childcare is normally provided through salary sacrifice. This means an employee gives up part of their salary in return for a non-cash benefit.

Employees won’t be able to receive childcare vouchers if they start using the new Tax-Free Childcare scheme. You must not give them any more vouchers, even if this means changing a salary sacrifice arrangement.

What’s covered

What you have to pay and report depends on whether:

  • you provide a workplace childcare facility yourself
  • your employees pay for childcare themselves and you pay them back
  • you contract directly with a childcare provider, such as a commercial nursery or a childminder
  • you give your employees childcare vouchers
  • your employees applied to join your employer-supported childcare scheme on or after 6 April 2011