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HMRC internal manual

Employment Income Manual

Benefits: exemptions: other childcare and childcare vouchers: availability to all employees

Section 318A(5) ITEPA 2003

From 6 April 2005, the exemptions from Income Tax and NICs only apply to benefits provided under a scheme if the childcare arrangements are open to:

  • all employees generally (see EIM22017), or
  • generally to all employees at a particular location

subject to an exception relating to relevant low-paid employees (see EIM22016).

The condition is intended to encourage employers to provide childcare for all employees. If the scheme is only available to a particular group of employees - for example, directors or senior managers - this condition will not be met and the value of the benefit will remain liable to Income Tax and NICs.

Employers may operate on a number of sites but offer a childcare scheme at only one of them. If the scheme is available to all employees working at the site where it is located the condition will be satisfied. There’s no requirement to provide a childcare scheme at every site.

The rule does not require the employer to provide unlimited places. Places available in a childcare scheme may be limited but an employer’s scheme will not fail to attract exemption simply because there is a waiting list and some employees cannot be catered for at any given time. However, in these circumstances the criteria for awarding places should not be biased in favour of particular groups of employees.

Section 318A (5) and section 318AZA ITEPA 2003

The condition above relating to all employees generally has been amended to all “eligible” employees. This takes effect from 4 October 2018. (See EIM22017 for the meaning of ‘eligible employee’.)