When the £50 (now £55) exemption first came in I am sure that there was something in the FAQs for employees that suggested that a person with more than 1 job could qualify for tax-exempt childcare from each employment. However, that has now vanished and I am advised by the employers' helpline that an individual can only qualify for £55 per week, regardless of how many jobs. The legislation does not appear to say this and an employer is not advised to ask employees whether they are already recieving the benefit from other sources. Did I imagine the original question and are HMRC correct?
Cathy Blacklock
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A question of interpretation.....
Hi Cathy
Since posting my original comment, I have been through both s270A and s318A again on a line by line basis. As you are aware, s270A deals with childcare vouchers and s318A deals with "other care" - for example, where the employer contracts directly with the childcare provider for the provision of the care. Each is quite specific in saying that "an employee" is only entitled to one exempt amount even if care is provided for more than one child.
However, does this mean "an employee generally" - that is to say, an individual person irrespective of how many employments are held - or "an employee of a specific employer"? If the latter, your client would be home and dry.
I suspect, though, that HMRC intended the former and that they would argue long and hard that they were right. If so, perhaps the legislation should have used the words "employed individual" rather than simply "employee"?
Interesting point
Cathy, you raise an interesting point when you ask whether an employee with more than one employment can receive £55 worth of childcare vouchers or benefit per week from each employer. I have looked at the legislation and, unless I am missing something, there doesn't appear to be anything to say that the employee cannot do this. I suppose it comes down to practicalities in that the employee can only sacrifice salary to the extent that the earnings that are left do not fall below the NMW. In other words, the earnings from each employment would have to be high enough to allow the sacrifice to take place.
If I was an employee who wanted to double up in this way - and if I had any doubts as to whether or not it was allowable - I wouldn't say anything to either employer. None of the childcare scheme documentation that I have seen to date asks employees to certify or declare whether or not they are receiving the benefit or vouchers from elsewhere so the employer could, genuinely, claim innocence in the event of a challenge from HMRC.
HMRC would probably suss what was going on when the employee applied for tax credits - but whether they would do anything is another matter entirely.
On the other side, there is absolutely no reason why two parents - either working for the same employer or for two different employers each operating a scheme - cannot sacrifice £55 each, even if they only have one child. See Page 6 of HMRC's booklet E18 "How to help your employees with childcare".
Why ring the helpline?
Can I ask why you rang the help line? I have found they don't always get it right - and there is no come back if they get it wrong. They are not very good at answering stuff that may require "interpretation" - but then why should they be?
You are right - there is nothing to say that a person with more than 1 job could not qualify for the tax-exempt childcare voucher per job - how would anyone know? The way it works it would be impossible to check. Also husband & wife working for 1 employer - where does it say they both cannot claim the £55.00 each . Finally - Family tax credit - childcare contributions - how do they know that the person is not paying it themselves and getting the vouchers? The vouchers are to the Childminder, not the employee - there is no way they can find out, unless the employee tell them.
The system is dependant on the employee knowing what is going on, and informing the relevant people - the employers & the HMRC - not always an easy thing when life gets in the way and half the time the employee doesn't understand it anyway.