Expenses and benefits: childcare
What to report and pay
If the childcare you provide is not exempt from tax and National Insurance, you must report the costs to HM Revenue and Customs (HMRC).
Commercial childcare
If you provided commercial childcare above the exempt limit, you must:
- report the amount above the limit on form P11D
- pay Class 1A National Insurance on the amount above the limit
Childcare vouchers
If you provide childcare vouchers to employees above the exempt limit, you must:
- report the amount above the limit on form P11D
- deduct Class 1 National Insurance (but not PAYE tax) on the amount above the limit
Childcare your employees pay for and you pay them back
If you cover the costs of employees’ childcare in any of the following ways, this counts as earnings:
- paying them back for their childcare bills
- providing a cash allowance to cover childcare costs
- providing additional salary to meet the cost of childcare
In most cases, you’ll need to:
- add the amount you pay the employee to their other earnings
- deduct and pay PAYE tax and Class 1 National Insurance through payroll