Expenses and benefits: childcare
What's exempt
You might not have to report anything to HM Revenue and Customs (HMRC) or pay tax and National Insurance.
Workplace nurseries
If you provide places for employees’ children in a workplace nursery, you do not have to report or pay anything. To be exempt, a workplace nursery must:
- have the appropriate registrations and approvals
- be available to all your employees
- provide childcare for your employees’ children, or children they have parental responsibility for
- provide childcare up to the maximum age its registration and approval allows for
The nursery does not have to be at your workplace - it can be in other premises that you manage and finance, as long as they’re not a private residence.
Commercial childcare or vouchers
You can provide a fixed amount of employee-supported childcare to employees without having to pay or report anything. They must have joined your childcare or voucher scheme and had their wages adjusted on or before 4 October 2018.
To be exempt, the childcare you provide (or provide vouchers for) also needs to meet the criteria for workplace nurseries.
Certain low-paid employees may be excluded from the requirement for childcare to be available to all employees. HMRC’s technical guidance on childcare voucher exemption has full details.
Limits for exemption
For any employees who applied to join a childcare scheme you run before 6 April 2011, the limit is £55 a week, or £243 a month.
There are different rules for employees who joined employer-supported childcare schemes on or after 6 April 2011.
The main difference is that the limit for these employees depends on the rate of Income Tax they pay. The limits are shown in the following table:
| Rate of Income Tax | Weekly exempt limit | Monthly exempt limit |
|---|---|---|
| Basic | £55 | £243 |
| Higher | £28 | £124 |
| Additional | £25 | £110 |
You’ll need to carry out a ‘basic earnings assessment’ to work out the correct rate, and keep certain records. HMRC’s guide to employer-supported childcare has full details.