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HMRC internal manual

Employment Income Manual

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Benefits: exemptions: childcare and childcare vouchers: rules from 6 April 2005: meaning of “care” and “qualifying childcare”

Section 318A ITEPA 2003

The definitions set out in Sections 318B and 318C apply as appropriate to Section 318 (employer-supported childcare), Section 318A (other childcare) and Section 270A (qualifying childcare vouchers).

Care

“Care” is defined generally for the purposes of these exemptions as any kind of care or supervised activity apart from what is provided in schools as part of the child’s compulsory education. However, not all care satisfies the conditions that provide the exemptions. Only “qualifying child care” does that.

Qualifying child care

The rules seek to ensure that only childcare which meets nationally recognised standards will attracts the exemptions from income tax and NICs. In general terms the childcare must be registered with or approved by the relevant authorities. The rules are complex because different statutory powers apply to England, Wales, Scotland and Northern Ireland.

Registered childcare:

Childcare provided away from the child’s home must be registered.

  • In England and Wales for children up to and including 7 years.
  • In Scotland for children up to and including age 16.
  • In Northern Ireland for children up to including 12.

Registered childcare within the United Kingdom consists of:

In England only:

A person registered under Part 3 of the Childcare Act 2006. This will include persons on the following registers operated by Ofsted;

  • The Early Years Register
  • The General Childcare Register - compulsory part
  • The General Childcare Register - voluntary part.

Schools - care provided by the governing body of a school is approved if it takes place:

  • outside normal school hours (this means the normal hours of compulsory education adopted by the school as appropriate for the age of the child)
  • on school premises or
  • on premises that are covered by the inspection of the whole school activity by Ofsted or the equivalent inspection body for certain independent schools

Other care providers

  • a domiciliary worker or nurse from an agency registered under the Domiciliary Care Agencies Regulations 2002 providing childcare in the child’s home

In Wales only:

  • a childcare provider registered by the National Assembly for Wales (through the Care Standards Inspectorate for Wales)
  • out-of-school-hours childcare, provided by a school on the school premises, or by a Local Authority
  • a person approved under the Approval of Child Care Providers (Wales) Scheme 2007 providing childcare in the child’s home or if several children are being looked after, in the home of one of the children
  • a domiciliary worker or nurse from an agency registered under the Domiciliary Care Agencies (Wales) Regulations 2004 providing childcare in the child’s home
  • by a foster carer under the Fostering Services (Wales) Regulations 2003. (The care must be for a child who is not a foster carer’s foster child.)

In Scotland only:

  • a childcare provider registered by the Scottish Commission for the Regulation of Care
  • out-of-school-hours childcare clubs registered by the Scottish Commission for the Regulation of Care
  • childcare provided in the child’s home by, or introduced through, childcare agencies, sitter services and nanny agencies which are required to be registered.

In Northern Ireland only:

  • childcare registered by a Health and Social Services Trust
  • out-of-school-hours childcare, provided by a school on the school premises, or by an Education and Library Board or
  • a person approved under the Tax Credits (Approval of Home Child Care Providers) Scheme (Northern Ireland) 2006 providing childcare in the child’s home.

Outside the UK

Childcare provided outside of the United Kingdom cannot generally be accepted as “qualifying childcare” as it is outside of the jurisdiction of UK inspection and registration. The only exemption to this is childcare provided by a person approved under a Ministry of Defence accreditation scheme abroad

Childcare that is not “qualifying childcare”

“Qualifying childcare” does not include care provided by a relative of the child in the child’s own home. This includes relatives who are registered or approved childcare providers. For these purposes a relative means:

  • parent
  • step-parent
  • foster parent
  • grandparent
  • aunt or uncle
  • brother or sister
  • whether by blood, half blood, marriage or civil partnership.

Childcare provided by relatives can be qualifying childcare in the following circumstances:

  • the relative is a registered or approved childcare provider
  • the care is provided away from the child’s own home
  • the care is provided to non-related children in addition to the related child or children.