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Section 270A ITEPA 2003

Example

Paul and Charlotte, aged 3 and 6 respectively, live with their grandmother in the week and with their father during alternative weekends. Their mother died 2 years ago. The father pays 拢120 per week to the children鈥檚 grandmother for their maintenance. Paul goes to a registered childminder 5 mornings a week. Paul鈥檚 grandmother pays the childminder 拢60 a week using childcare vouchers, which her employer has been providing as part of her remuneration continuously since June 2010. The grandmother does not know about the salary arrangements for the other 20 people who work in her office. Charlotte sometimes attends an out of school club, which costs her grandmother 拢8 a session.

The father is not eligible for any exemption, as his employer does not provide either type of childcare.

As the grandmother鈥檚 employer provides childcare vouchers, which are used to pay the childminder, exemption may be available for these providing all of the following conditions are met:

• Condition A - child : As the grandmother has parental responsibility for Paul and he lives with her, this condition is met.
• Condition B - qualifying childcare: As the childminder is registered, this condition is met.
• Condition C - availability: It will need to be checked whether the choice of receiving childcare vouchers is available to all of the grandmother鈥檚 colleagues at work (subject to the possible exception of relevant low-paid employees - see EIM16052). If it is then this condition is met.
• Condition D - relevant earnings amount: As the grandmother was receiving childcare vouchers before 6 April 2011, this condition does not apply.

The limit of the exemption for childcare vouchers is 拢55 per week. The value of the childcare vouchers provided is 拢60 so the excess of 拢5 per week will be chargeable to tax as employment income, even if the exemption applies. Exemption is not available for the amount the grandmother pays to the out of school club because this is not employer-supported childcare.