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

Meaning of "relevant earnings amount" and "required time"

Section 270B defines two key terms used in determining the level of tax exemption available for qualifying childcare vouchers: the "relevant earnings amount" and the "required time".

• The "relevant earnings amount" is the employee's total salary, wages, fees and deemed earnings from the employer, less any excluded amounts such as pension contributions and payroll giving deductions.
• Where employment begins part-way through the tax year, the earnings figure is grossed up to an annual equivalent by multiplying by 365 divided by the number of days from the start of employment to the end of the tax year.
• The "required time" for estimating earnings is normally the beginning of the tax year, but if the employee joins the childcare voucher scheme during the year, it is the date they join — that is, when the employer agrees to provide vouchers and there is a qualifying child.
• The Treasury has the power to amend section 270B by order, and may also make regulations specifying additional types of earnings and excluded amounts.