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HMRC internal manual

National Insurance Manual

Class1: -overview of childcare non-cash vouchers - exemptions

Regulation 25 and paragraph 7 of Part 5 of schedule 3 Social Security (Contributions) regulations 2001

The Social Security (Contributions)(Amendment No 4) Regulations 2011 (SI 2011 no 1000)

From 6 April 1999,

A non-cash voucher provided for the costs of child care is disregarded so long as:

  • the child is under age 16;
  • the employee has parental responsibility for the child.

From 6 April 2005)

A non-cash “qualifying” childcare voucher provided for the cost of childcare is disregarded to the sum of £50 as well as the administration cost of the voucher as long as the following conditions are met:

  1. The voucher is provided to enable an employee to obtain care for a child
  2. The voucher can only be used to obtain qualifying child care
  3. The vouchers are provided under a scheme open to the employer’s employees generally or generally at a location

This 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 instance, directors or senior managers - the condition will not be met

The crucial point here is that the scheme must be open to all. But if an employee chooses not to take part in the scheme it will not mean that the condition is not satisfied

For the meaning of “care”, “child”, “parental responsibility” and “qualifying childcare” for the purposes of conditions A and B, see NIM02449

From 6 April 2009 the amount that could be disregarded rose to £55 a week

From 6 April 2011:

Changes were made to the conditions for providing vouchers to employees for childcare. For those new to a childcare voucher scheme from that date the amount that is disregarded for NICs purposes is £55 a week for ordinary rate tax payers £28 for higher rate tax payers and £25 for additional rate tax payers. A further condition was added to the three above to administer this change:

  1. It is the responsibility of the employer to determine the tax liability of the employee before awarding vouchers so that they know how much can be correctly disregarded