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HMRC internal manual

Employment Income Manual

Vouchers and credit-tokens: childcare vouchers: working tax credit

Childcare element of working tax credit

If an employee receives a childcare non-cash benefit (such as childcare vouchers or a nursery place) any entitlement to the Working Tax Credit (WTC) and the childcare element of WTC is likely to be affected. This is because the employer is meeting the childcare cost instead of the parent. Working parents can only claim the childcare element of WTC for approved childcare costs that they have met themselves.

Non-cash childcare vouchers, if used for registered or approved childcare or the benefit of a work place nursery, is disregarded when calculating income for the purposes of WTC. See the Tax Credits Technical Manual (TCTM) for further information.