Income Tax (Earnings and Pensions) Act 2003 section 318AA

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

Section 318AA defines two key terms — "relevant earnings amount" and "required time" — used to determine the level of tax exemption available for employer-supported childcare provided away from the employer's premises.

• The "relevant earnings amount" is calculated as total earnings and deemed earnings from the employment, minus any excluded amounts, for the tax year in question.
• Where an employee joins the employer part-way through the tax year, their earnings figure is scaled up to a notional annual amount by multiplying by 365 divided by the number of days employed in that year.
• The "required time" — the point at which the earnings estimate is made — is normally the start of the tax year, but if the employee joins the childcare scheme during the year, it is the date they join.
• An employee is treated as joining the scheme once the employer has agreed to provide childcare under it and there is a qualifying child associated with the employee.