HMRC internal manual

Employment Income Manual

EIM16051 - Vouchers and credit tokens: childcare vouchers

Section 84(1)(ab) ITEPA 2003

For a description of the points to consider in a case involving vouchers or credit tokens see EIM16030.

A childcare voucher is defined as a voucher, stamp or similar document or token, intended to enable a person to obtain the provision of care for a child.

This voucher does not need to be exchanged. It could be that the childcare voucher is physically handed over when paying for the childcare services. It could be that childcare is paid for using an electronic version of the childcare voucher.

Exceptionally a childcare voucher may be cashed. An example of when this might occur could be the death of the child for whom childcare vouchers are provided. As the primary purpose of the childcare voucher is to pay for childcare services not that it is exchangeable for cash, the voucher may be accepted as a non-cash voucher. If the voucher is exchanged for cash, then the employer must apply PAYE tax and NIC to this cash payment.

See also EIM16052 for an explanation of the limited exemption that applies in relation to childcare vouchers from 6 April 2005.

If the employee can give up vouchers and obtain a higher salary see EIM21990.