Article Summary
This guidance note provides an overview of the tax efficient childcare schemes available to employers and employees. It covers workplace nurseries, childcare vouchers, salary sacrifice arrangements and the new ‘tax-free’ childcare scheme introduced in April 2017. The guidance explains the conditions to be met for the provision of workplace nurseries to be exempt from tax. It also summarises the rules for the limited exemption available where the employer provides childcare vouchers or contracts directly with a childcare provider. Although this scheme closed to new entrants in October 2018, existing users can continue to benefit. The note highlights the introduction of the new ‘tax-free’ childcare scheme from April 2017 which provides a government top-up to childcare costs. It explains the eligibility criteria, including the upper limit on adjusted net income. Employers may point employees towards this scheme but cannot provide the top-up payments themselves.Finally, the guidance provides a summary of the temporary changes to the childcare schemes during the coronavirus pandemic to support critical workers and those whose income has reduced.