Expenses and benefits: childcare
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 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