SolvedEIM22017 | Benefits: exemptions: childcare and childcare vouchers supported by the employer: availability to all employees: rules from 4 October 2018: eligible employee
From HM Revenue & Customs · Employment Income Manual
Sections 318A and 318AZA ITEPA 2003; s318 AZA inserted by the Childcare Payments Act 2014 section 64 (4)
From 4 October 2018, the exemption is restricted to “eligible” employees.
Meaning of eligible employee
An employee is an eligible employee for the purposes of sections 318A and 318A (5) (see EIM22015), if the employee meets conditions A to C:
Condition A
The employee:
was employed by the employer immediately before the 4 October 2018 and
continues to be employed by the employer on or after that date
Condition B
There has been at least one qualifying tax week in a period of 52 tax weeks ending on or after 4 October 2018.
For the definitions of “qualifying week” and “tax week”, see EIM22011.
Condition C
The employee has not given the employer a childcare account notice.
A childcare account notice is a written notice informing the employer that the employee wishes to leave the scheme in order for the employee or employee’s partner to be able to open a childcare account under section 17 of the Childcare Payments Act 2014.
If any of these conditions are not satisfied, then the employee is not eligible for directly contracted childcare.
This means that from 4 October 2018, directly contracted childcare schemes are not available to new applicants; employees already in receipt of employer supported childcare by the 4 October 2018 can continue using the scheme as long as the employer continues to offer the scheme or as long as they continue to be eligible employees.
Condition A may be regarded as met where an employee has transferred to an employer on after the 4 October 2018 under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) as this is deemed as being the same employment for the purposes of condition A.
If an employee joins Tax-Free Childcare they commit to giving their employer a childcare account notice within 3 months. If that employee follows through on that commitment this means that condition C is not met, and regardless of whether conditions A and B are met they are not eligible for directly contracted childcare. If they fail to follow through there are consequences under Tax-Free Childcare.