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HMRC internal manual

Employment Income Manual

Benefits: exemption for employer supported childcare: general: arrangement of guidance

Sections 318, 318A, 318AA, 318B, 318C, 318D ITEPA 2003

When an employer provides childcare facilities for children of employees (other than lower paid employees for the tax year 2015 to 2016 and earlier years only) the provision potentially gives rise to taxable earnings under the benefits code (see EIM21687).

Section 318 provided a limited exemption for some forms of provision for years up to 5 April 2005. It was amended from 6 April 2005 as part of new provisions that extended the circumstances in which tax exemption applies to employer-supported childcare arrangements.

Section 318 mainly applies to workplace nurseries in some narrow circumstances. See EIM21905 for an overview of the circumstances when the exemption applies.

From 6 April 2005, new provisions in section 318A to D extended the existing exemption. See the summary of the changes at EIM21902.

The tax exemption provided by section 318A is further amended from 6 April 2011. See the summary of the changes at EIM22010.

Arrangement of guidance

The guidance is set out in separate blocks (see EIM21901).

Guidance on vouchers given to employees to pay for qualifying childcare begins at EIM16050.