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.

If an employee starts using Tax-Free Childcare

You must stop giving your employee childcare vouchers if they tell you they’ve started using the new Tax-Free Childcare scheme.

If this means stopping or changing a salary sacrifice arrangement, you must also update your employee’s contract and your payroll software.

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