Benefits: exemptions for certain employer supported childcare from 6 April 2005: contents
Section 318A - D ITEPA 2003
Purpose of the legislation
Workplace Nurseries: Section 318 provides a narrow exemption from income tax and NIC where the employer has either established a workplace nursery at the business premises or has entered into arrangements with other employers for a jointly operated facility on premises provided by one of them and made care available to the children of employees. Benefits arising from the provision of a workplace nursery continue to attract unlimited exemption from charge to tax as employment income and NIC if the extended qualifying conditions are met.
Other childcare: Sections 318A - D came into force on 6 April 2005. The new rules are intended to encourage employers to choose from a range of childcare options to help employees with the costs of childcare. However, while the new measures extend the range of choices, the exemption is limited to £55 per week (£50 per week in year 2005-06) for both tax and NICs.
For employees who join their employer’s scheme on or after 6 April 2011 the exemption may be further restricted (see EIM22012).
Exemption from income tax: Section 16 Finance Act 2005 made employer supported childcare exempt from income tax. This applies for 2005-06 and subsequent years. Until this change was introduced the exemption only applied to benefits taxable under the benefits code. It was possible in certain circumstances for a charge to arise if the childcare was treated as earnings. FA 2005 removed the possibility of an earnings charge.
Childcare Vouchers Section 270A ITEPA 2003 see EIM16050 and subsequent pages.