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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Vouchers and credit-tokens: childcare vouchers: exemption from 6 April 2011: excluded amounts

Section 270B(4) ITEPA 2003 and The Employer Supported Childcare (Relevant Earnings and Excluded Amounts) Regulations 2011

Excluded amounts

For the purpose of calculating the relevant earnings amount the following items are “excluded amounts”:

(a) contributions under a pension scheme if the employee has authorised the employer to make the deductions from relevant payments (as defined by regulation 4 of the PAYE Regulations) for which relief at source is given under section 192(1) of the Finance Act 2004;

(b) contributions under a pension scheme allowed under section 193(2) of the Finance Act 2004 (relief under net pay arrangements) to be deducted by the employer from the employee’s employment income for the tax year in accordance with the PAYE Regulations;

(c) donations for which a deduction is made under section 713 of ITEPA (payroll giving) in calculating the employee’s net taxable earnings from employment by the employer for the tax year in accordance with the PAYE Regulations;

(d) expenses within Chapter 3 of Part 3 of ITEPA (expenses payments) which the employer is authorised to exclude from the employee’s taxable earnings for the tax year in accordance with the PAYE Regulations;

(e) payments in respect of removal expenses to which section 271 of ITEPA applies (as defined in section 272 of ITEPA) and which are taxable earnings of the employee from employment by the employer for the tax year;

(f) amounts equivalent to the amount of the personal allowance under section 35(1) of the Income Tax Act 2007, and in addition if applicable, the amount of the blind person’s allowance under section 38 of the Income Tax Act 2007 (see EIM16058).

However, (f) does not apply if after taking into account all relevant earnings and all other excluded amounts the relevant earnings amount is £150,000 or more.