Income Tax (Earnings and Pensions) Act 2003 section 270A

Limited exemption for qualifying childcare vouchers

Section 270A provides a limited income tax exemption for qualifying childcare vouchers provided to eligible employees, setting out the conditions that must be met and how the exempt amount is calculated.

• Qualifying childcare vouchers provided to eligible employees are exempt from income tax up to a weekly exempt amount, which varies depending on the employee's earnings: £25 per week for additional rate taxpayers, £28 for higher rate taxpayers, and £55 for basic rate taxpayers.
• To qualify, the voucher must be for care of the employee's own child or stepchild (maintained at their expense) or a child living with them for whom they have parental responsibility, and must only be redeemable for qualifying childcare.
• The voucher scheme must be open to all eligible employees generally, or to all those at a particular location, and the employer must have estimated the employee's relevant earnings for the tax year at the required time.
• Each employee is entitled to only one exempt amount regardless of the number of children, and the exemption cannot be claimed alongside the separate exemption for employer-contracted childcare under section 318A for the same tax week.