Employer-Provided Child Care - Changes to the definition of “qualifying child care”

Written by Ian Congreave - Filed under: Childcare on August 25th, 2008

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Where the qualifying conditions are met, employers are able to provide childcare benefits that enjoy full or partial tax exemption, namely

childcare facilities on the employer’s premises
childcare facilities contracted by the employer off-site
childcare vouchers.

In the case of the second and third of these provisions, which enjoy a limited tax exemption of up to £55 per week, one of the key, and most complex, qualifying conditions is that the childcare contracted by the employer, and the childcare that may be obtained by the use of childcare vouchers, must be “qualifying child care”. What constitutes “qualifying child care” is detailed in the tax legislation and is different for each country of the United Kingdom.

The definition of “qualifying child care” is being amended from 1 September 2008 to reflect changes that are also being made to the Working Tax Credit Regulations. In particular, “qualifying child care”

no longer includes care provided in an appropriate children’s home, a care home, as a patient in a hospital and in a residential family centre (in England)
but does include
- care provided by or under the direction of the proprietor of a school on the school premises (in England),
- care provided by foster parents other than to children that they are fostering (in England and Wales).

More detailed guidance on qualifying child care is provided in HMRC’s E18 booklet.

Further information:
The Income Tax (Qualifying Child Care) Regulations 2008
Explanatory memorandum to the Income Tax (Qualifying Child Care) Regulations 2008
View the previous news item for Childcare

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Written by Ian Congreave -

Filed under: Childcare on August 25th, 2008