Part 4

Employment income: exemptions
Chapter 11

Miscellaneous exemptions

Childcare

Childcare: exemption for employer-provided care
318
1
No liability to income tax arises
in respect of the provision for an employee of care for a child if conditions A to D are met.
For the meaning of “care” and “child”, see section 318B.
2
If those conditions are met only as respects part of the provision, no such liability arises in respect of that part.
3
Condition A is that the child—
a
is a child or stepchild of the employee and is maintained (wholly or partly) at the employee’s expense,
b
is resident with the employee, or
c
is a person in respect of whom the employee has parental responsibility.
For the meaning of “parental responsibility”, see section 318B.
4
Condition B is that—
a
the premises on which the care is provided are not used wholly or mainly as a private dwelling, and
b
any applicable registration requirement is met.
5
The registration requirements are—
za
in England, that under
... Part 3 of the Childcare Act 2006;
a
in
... Wales, that under
Part 2 of the Children and Families (Wales) Measure 2010
;
b
in Scotland, that under
Part 5 of the Public Services Reform (Scotland) Act 2010
;
c
in Northern Ireland, that under Part XI of the Children (Northern Ireland) Order 1995.
6
Condition C is that—
a
the premises on which the care is provided are made available by the scheme employer alone, or
b
the partnership requirements are met.
In this section “
scheme employer
” means the employer operating the scheme under which the care is provided (who need not be the employer of the employee).
7
The partnership requirements are—
a
that the care is provided under arrangements made by persons who include the scheme employer,
b
that the premises on which it is provided are made available by one or more of those persons, and
c
that under the arrangements the scheme employer is wholly or partly responsible for financing and managing the provision of the care.
8
Condition D is that the care is provided under a scheme that is open—
a
to the scheme employer’s employees generally, or
b
generally to those of the scheme employer’s employees at a particular location,
and that the employee to whom it is provided is either an employee of the scheme employer or is an employee working at the same location as employees of the scheme employer to whom the scheme is open.
Words in s. 318(5)(za) omitted (18.7.2009) by virtue of The Income Tax (Qualifying Child Care) Regulations 2009 (S.I. 2009/1544), regs. 1(2), 2
Words in s. 318(5)(a) substituted (6.4.2011) by The Income Tax (Qualifying Child Care) Regulations 2011 (S.I. 2011/775), regs. 1, 2
Words in s. 318(1) substituted (with effect in accordance with s. 16(7) of the amending Act) by Finance Act 2005 (c. 7), s. 16(5)
S. 318(5)(za) inserted (1.9.2008) by The Income Tax (Qualifying Child Care) Regulations 2008 (S.I. 2008/2170), regs. 1, 2(a)
Ss. 318-318D substituted for s. 318 (with effect in accordance with s. 78(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 13 para. 1
Words in s. 318(5)(a) omitted (1.9.2008) by virtue of The Income Tax (Qualifying Child Care) Regulations 2008 (S.I. 2008/2170), regs. 1, 2(b)
Words in s. 318(5)(b) substituted (28.10.2011) by The Public Services Reform (Scotland) Act 2010 (Consequential Modifications of Enactments) Order 2011 (S.I. 2011/2581), art. 1(2)(b), Sch. 2 para. 6(a)
Pt. 4 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 26(3)