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HMRC internal manual

National Insurance Manual

Class 1: vouchers - non-cash vouchers - qualifying childcare vouchers from 6th April 2005 - how to calculate the exempt amount - the general rule

Paragraph 7(1)-(4) of Part 5 of Schedule 3 Social Security (Contributions) Regulations 2001

An employee is only entitled to one exempt amount. This is so even if qualifying childcare vouchers are provided for more than one child.

Calculating the exempt amount

The exempt amount is calculated by the formula E x QW where:

  • E is the total of:
  • £55; or for those new to a childcare voucher scheme from 6 April 2011, £55 a week for ordinary rate tax payers £28 for higher rate tax payers and £25 for additional rate tax payers plus the administration costs for the voucher
  • QW is the number of qualifying weeks:

a) for which the employee has been employed by the secondary contributor during the tax year in which in which the qualifying childcare voucher is provided; and

b) for which no other qualifying childcare voucher has been provided by the secondary contributor.

Meaning of “administration costs”

The administration costs for a voucher means the difference between:

  • the cost of providing the voucher; and
  • its face value ie, the amount stated on, or recorded in, it as the value of the provision of childcare that may be obtained by using it.

“Secondary contributor”


  • an employee has two or more employments; and
  • the earnings from which fall to be aggregated under either regulation 14 or 15 of the above Regulations,

The reference to “secondary contributor” in (b) of the definition of QW above is a reference to the “secondary contributor” in respect of any of those employments.


  • the meaning of “qualifying week”, see NIM02453 
  • examples showing how to calculate the simplified exempt amount, see NIM02472