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HMRC internal manual

Tax Credits Technical Manual

Income: Employment income rules - Specific payments and benefits in kind excluded from employment income for tax credit purposes: Child Care Vouchers

The Tax Credits (Definition and Calculation of Income) Regulations 2002, Reg. 4(4), Table 1 (Item 15).

A cash voucher, non-cash voucher or credit-token to the extent that it is used by the recipient to obtain relevant childcare.

Relevant child care, is care that had they paid for it (instead of using the voucher(s) or token), they would have been incurring relevant child care charges for the purposes of the childcare element of WTC: the child care element is only available for costs incurred by the claimant(s).

For details of the WTC childcare element see TCTM02630 and for details on employment income see TCTM04103.


Note: With effect from 6 April 2017 the way in which many salary sacrifice and benefit in kind schemes are taxed will change, which means that some tax credit claimants will see an increase in their taxable income.

For the purposes of tax credits, where one of these schemes is in operation the taxable income figure should be used.