Introductory

1 Entitlement to receive money towards costs of childcare

(1) This Act contains provision for HMRC to make payments (“top-up payments”)
to be used towards the costs of qualifying childcare.

5For the meaning of “qualifying childcare”, see section 2.

For the meaning of “qualifying childcare”, see section 2.

(2) A person is entitled to receive a top-up payment for an entitlement period in respect of
a child if—

(a) the person is an eligible person for the entitlement period (see section 3),

(b) 10the person has made a valid declaration of eligibility for the entitlement period
(see section 4),

(c) the child is a qualifying child (see section 14),

(d) the person holds a childcare account in respect of the child (see section 15), and

(e) a qualifying payment is made into the childcare account during the entitlement
15period (see section 19).

(3) HMRC must pay the top-up payment into the childcare account.

(4) The amount of the top-up payment is 25% of the amount of the qualifying
payment.

(For provision limiting the amount of qualifying payments that may be made
20into a childcare account in an entitlement period, see section 19(4).)

(For provision limiting the amount of qualifying payments that may be made
into a childcare account in an entitlement period, see section 19(4).)

(5) Regulations may amend subsection (4) so as to substitute a different
percentage for the percentage for the time being specified there.

(6) Sections 17 to 25 contain provision about childcare accounts, including
restrictions on the kinds of payments that may be made from childcare
5accounts.

(7) Sections 26 to 28 contain provision about obtaining and sharing information.

(8) Sections 29 to 33 contain special rules about persons who are claiming tax
credits or universal credit.

(9) Sections 34 to 54 contain provision about penalties and other enforcement
10powers, including powers to recover top-up payments in certain
circumstances.

(10) Sections 55 to 60 contain provision about reviews and appeals.

(11) Section 61 contains provision enabling HMRC in certain circumstances to
compensate persons who have been deprived of the opportunity to receive
15top-up payments.

(12) Sections 62 and 63 contain provision for the withdrawal of tax exemptions in
respect of certain kinds of employer-provided childcare schemes.

2 Qualifying childcare

(1) In this Act “childcare” means any form of care or supervised activity for a child
20that is not provided in the course of the child’s compulsory education.

(2) Childcare that is provided for a person is “qualifying childcare” for the
purposes of this Act if—

(a) it is registered or approved childcare, and

(b) the main reason, or one of the main reasons, for incurring the costs of
25the childcare is—

(i) to enable the person to work, or

(ii) where the person has a partner, to enable both the person and
the person’s partner to work.

(3) Regulations may—

(a) 30make provision about what is, or is not, to be regarded as registered or
approved childcare for the purposes of this section;

(b) define what is meant by “work” for the purposes of this section;

(c) specify cases where the condition in subsection (2)(b) is to be treated as
met;

(d) 35specify cases where that condition does not need to be met.

(4) Regulations made under subsection (3)(a) may, in particular, provide that
childcare provided outside the United Kingdom is registered or approved
childcare if it is provided by a person approved by an organisation that is
accredited by a person or body under an enactment.

(5) 40Subsection (2) is subject to any direction made under section 49 (which enables
HMRC in certain circumstances to direct that childcare provided by a person
is not qualifying childcare).

Eligibility

3 Eligible persons

(1) A person is an eligible person for an entitlement period if—

(a) the person meets the conditions of eligibility in sections 6 to 13, and

(b) 5in a case where the person has a partner, the person’s partner meets the
conditions of eligibility in sections 9 to 13.

(2) In sections 6 to 13 “the date of the declaration” means the day on which the
person makes a declaration of eligibility for the entitlement period (see section
4).

(3) 10Sections 6 to 13 need to be read with—

(a) regulations made under them, and

(b) regulations made under subsection (4).

(4) Regulations may provide for exceptions to the requirement for any of the
conditions of eligibility in sections 6 to 13 to be met by a person.

(5) 15Regulations may make provision about when a person is, or is not, to be
regarded as another person’s partner for the purposes of this Act.

4 Declarations of eligibility

(1) For the purposes of this Act a “declaration of eligibility” is a statement made by
a person for an entitlement period which states that the person is an eligible
20person for the entitlement period.

(2) A declaration of eligibility made by a person for an entitlement period is
“valid” for the purposes of this Act if—

(a) HMRC are satisfied that the person is an eligible person for the
entitlement period,

(b) 25on the day on which the declaration is made, there is no other person
who—

(i) holds an active childcare account in respect of the relevant child
(see subsection (4)), or

(ii) is seeking to hold an active childcare account in respect of that
30child (see subsection (5)), and

(c) the declaration is made in accordance with regulations under this
section.

(3) But subsection (2)(b) does not apply for the purpose of determining whether a
declaration of eligibility made for the purposes of opening a childcare account
35is valid (see instead section 17(2)(c)).

(4) In subsection (2)(b) “the relevant child” means the child in respect of whom the
person making the declaration holds a childcare account.

For what is meant by an “active” childcare account, see section 17(3).

For what is meant by an “active” childcare account, see section 17(3).

(5) 40For the purposes of this section a person is “seeking to hold an active childcare
account” if—

(a) the person has applied to open a childcare account and the application
has not yet been determined,

(b) the person has made a valid declaration of eligibility for an entitlement
period which has not yet begun, or

(c) the person has made a declaration of eligibility for an entitlement
period which, if valid, would result in the person holding an active
5childcare account for that period.

(6) Regulations may make further provision about declarations of eligibility,
including, in particular—

(a) provision specifying, or enabling HMRC to specify, information which
a person making a declaration of eligibility is required to provide to
10HMRC;

(b) provision specifying, or enabling HMRC to specify, the form and
manner in which declarations of eligibility may be made;

(c) provision specifying the times when declarations of eligibility may be
made;

(d) 15provision about the consequences of making a declaration of
eligibility—

(i) after the beginning of the entitlement period for which it is
made, or

(ii) at such other time as may be specified;

(e) 20provision for any consequences specified by virtue of paragraph (d) not
to apply in specified circumstances or if specified conditions are met;

(f) provision specifying circumstances in which a person, or a person of a
specified description, may make a declaration of eligibility on another
person’s behalf, including provision enabling HMRC to appoint a
25person for that purpose;

(g) provision treating things done, or omitted to be done, by a person who
makes a declaration of eligibility on another person’s behalf as having
been done, or omitted, by that other person.

(7) In subsection (6) “specified” means specified in the regulations.

5 30Entitlement periods

(1) The length of an entitlement period is 3 months.

This is subject to the following provision.

This is subject to the following provision.

(2) Regulations may—

(a) 35amend subsection (1) so as to alter the length of an entitlement period,
and

(b) in consequence of any provision made under paragraph (a), amend any
reference in this Act to a period which begins on the day on which a
declaration of eligibility is made and is the same length as an
40entitlement period.

(3) Regulations may make further provision about entitlement periods, including,
in particular—

(a) provision for determining when entitlement periods are to begin or
end, and

(b) 45provision enabling HMRC, in circumstances specified in the
regulations, to vary the length of an entitlement period in particular
cases.

(4) Provision made by virtue of subsection (3)(b) may not enable HMRC to vary
the length of an entitlement period by more than a month.

Conditions of eligibility

6 The person must be 16 or over

5A person meets the condition of eligibility in this section if the person is at least
16 years old on the date of the declaration.

7 The person must be responsible for the child

(1) A person meets the condition of eligibility in this section if, at the date of the
declaration, the person is responsible for the relevant child.

(2) 10In subsection (1) “the relevant child” means the child in respect of whom the
person holds, or wishes to open, a childcare account.

(3) Regulations may make provision as to the circumstances in which a person is,
or is not, to be regarded as responsible for a child for the purposes of this Act.

8 The person must be in the UK

(1) 15A person meets the condition of eligibility in this section if the person is in the
United Kingdom on the date of the declaration.

(2) Regulations may—

(a) specify circumstances in which a person is to be treated as being, or not
being, in the United Kingdom;

(b) 20specify circumstances in which temporary absence from the United
Kingdom is disregarded;

(c) modify the application of this Act in relation to persons of a specified
description who are treated as being in the United Kingdom for the
purposes of this Act.

(3) 25In subsection (2) “specified” means specified in the regulations.

9 The person and his or her partner must be in qualifying paid work

(1) A person meets the condition of eligibility in this section if the person is in
qualifying paid work on the date of the declaration.

(2) Regulations may—

(a) 30make provision as to what is, or is not, qualifying paid work, and

(b) specify circumstances in which a person is, or is not, to be regarded as
in such work.

(3) Regulations under subsection (2) may, in particular—

(a) make provision for calculating a person’s expected income from any
35work for a period specified in the regulations,

(b) provide that a person is in qualifying paid work only if the person’s
expected income from the work for the period, taken together with the
person’s expected income from any other work for the period, is
greater than or equal to an amount specified in, or determined in
40accordance with, the regulations, and

(c) specify cases in which the condition mentioned in paragraph (b) does
not need to be met.

10 The income of the person and his or her partner must not exceed limit

(1) A person meets the condition of eligibility in this section if, at the date of the
5declaration, the person’s expected income for the relevant tax year is not
greater than an amount specified in, or determined in accordance with,
regulations for the purposes of this section.

(2) Regulations may make provision for calculating a person’s expected income
for a tax year.

(3) 10Regulations may provide that a person is treated as meeting the condition of
eligibility in this section (whether or not any provision has been made under
subsection (1)) if the person does not expect to pay income tax at the additional
rate or the dividend additional rate for the relevant tax year.

(4) Regulations may provide that a person is treated as not meeting the condition
15of eligibility in this section in any of the following cases—

(a) if the person has made, or expects to make, a claim under section 809B
of the Income Tax Act 2007 (claim for remittance basis to apply) for the
relevant tax year;

(b) if the person expects section 809E of that Act (application of remittance
20basis in certain cases without claim) to apply to the person for the
relevant tax year;

(c) if the person meets any other conditions specified in the regulations.

(5) In this section “the relevant tax year”, in relation to a declaration of eligibility,
means the tax year in which the date of the declaration falls.

11 25Neither the person nor his or her partner may be claiming universal credit

(1) A person meets the condition of eligibility in this section if, at the date of the
declaration—

(a) universal credit is not payable to the person in respect of any relevant
assessment period (see subsection (2)), and

(b) 30there is no subsisting claim that would result in universal credit
becoming payable to the person in respect of a relevant assessment
period.

(2) In subsection (1) “relevant assessment period”, in relation to a declaration of
eligibility, means any assessment period (within the meaning of the relevant
35legislation) that includes—

(a) the date of the declaration, or

(b) the whole or any part of the entitlement period for which the
declaration is made.

(3) For the purposes of subsection (1) universal credit is payable to a person in
40respect of a relevant assessment period if it would be so payable but for the
reduction of the award of universal credit to nil under the relevant legislation.

(4) In the case of a declaration of eligibility made for the purposes of opening a
childcare account, the reference in subsection (2) to the entitlement period for
which the declaration is made is to be read as a reference to the period of 3
45months beginning with the date of the declaration.

(5) Regulations may specify other circumstances in which a person is to be treated
as meeting, or not meeting, the condition of eligibility in this section.

(6) In this section “the relevant legislation” means—

(a) Part 1 of the Welfare Reform Act 2012, or

(b) 5any provision made for Northern Ireland which corresponds to that
Part of that Act.

12 The person and his or her partner must not be in a relevant childcare scheme

(1) A person (“P”) meets the condition of eligibility in this section if, at the date of
the declaration—

(a) 10P is not an eligible employee in relation to a relevant childcare scheme
(see subsections (2) and (3)),

(b) in a case where the declaration is made for the purposes of opening a
childcare account, P intends to give P’s employer a childcare account
notice (see subsection (4)) before the end of the period of 3 months
15beginning with the date of the declaration, or

(c) in a case where—

(i) the declaration is not made for the purposes of opening a
childcare account, and

(ii) P is a new partner of the person making the declaration (see
20subsection (5)),

P intends to give P’s employer a childcare account notice before the end
of the entitlement period for which the declaration is made.

(2) “Relevant childcare scheme” means—

(a) a scheme under which qualifying childcare vouchers (within the
25meaning of section 270A of ITEPA 2003) are provided for employees, or

(b) a scheme under which care for a child is provided for employees in
circumstances in which conditions A to D in section 318A of ITEPA
2003 are met.

(3) “Eligible employee”—

(a) 30in relation to a scheme within subsection (2)(a), has the meaning given
by section 270AA of ITEPA 2003, and

(b) in relation to a scheme within subsection (2)(b), has the meaning given
by section 318AZA of that Act.

(4) “Childcare account notice”, in relation to a person who is an eligible employee
35in relation to a relevant childcare scheme, means a written notice informing the
employer that the employee wishes to leave the scheme in order to be able to
open a childcare account or enable the employee’s partner to do so.

(5) For the purposes of this section P is a person’s new partner at the date of the
declaration made by the person if P has not been the person’s partner at any
40time when the person has previously made a valid declaration of eligibility.

(6) For provision enabling HMRC to recover top-up payments where P fails to
give P’s employer a childcare account notice as mentioned in subsection (1)(b)
or (c), see section 38.

13 Neither the person nor his or her partner may be receiving other childcare
support

(1) A person meets the condition of eligibility in this section if, at the date of the
declaration—

(a) 5no other relevant childcare support is payable to the person in respect
of any relevant period, and

(b) the person has not made, and does not intend to make, a claim that
would result in any other relevant childcare support becoming payable
to the person in respect of any relevant period.

(2) 10“Other relevant childcare support” means any payments towards the costs of
childcare which are made out of funds provided by a national authority, other
than—

(a) payments under this Act, or

(b) payments of a description specified in regulations.

(3) 15In subsection (2) “national authority” means any of the following—

(a) a Minister of the Crown (within the meaning of the Ministers of the
Crown Act 1975);

(b) the Scottish Ministers;

(c) the Welsh Ministers;

(d) 20a Northern Ireland department.

(4) “Relevant period”, in relation to a declaration of eligibility, means a period
which—

(a) includes the date of the declaration,

(b) includes the whole or any part of the entitlement period for which the
25declaration is made, or

(c) falls within that entitlement period.

(5) In the case of a declaration of eligibility made for the purposes of opening a
childcare account, any reference in subsection (4) to the entitlement period for
which the declaration is made is to be read as a reference to the period of 3
30months beginning with the date of the declaration.

Qualifying children

14 Qualifying child

(1) For the purposes of this Act “qualifying child” means a child of a description
specified in regulations.

(2) 35Regulations under this section may, in particular, specify different descriptions
for different periods.

Childcare accounts

15 Childcare accounts

(1) In this Act “childcare account” means an account which—

(a) 40is held by a person for the purpose of receiving top-up payments in
respect of a qualifying child,

(b) is provided by a person or body within section 16(1),

(c) satisfies the requirements imposed by or under this Act, and

(d) has been opened in accordance with this Act.

(2) Each childcare account must be held in respect of one child only.

(3) Regulations may—

(a) 5impose other requirements which must be satisfied in relation to
childcare accounts, and

(b) make provision about the way in which payments may be made into,
or from, childcare accounts.

(4) Regulations may provide that a person of a specified description may, or may
10in specified circumstances, manage a childcare account on behalf of the
account-holder.

(5) The provision that may be made by regulations under subsection (4)
includes—

(a) provision enabling HMRC to appoint a person for the purpose of
15managing a childcare account on the account-holder’s behalf, and

(b) provision specifying functions in relation to the management of a
childcare account which persons, or persons of a specified description,
may not perform on an account-holder’s behalf.

(6) In subsections (4) and (5) “specified” means specified in the regulations.

(7) 20Where a contract is entered into by or on behalf of a person who is 16 or 17
years old in connection with a childcare account held by the person, the
contract has effect as if the person had been 18 or over when it was entered into.

(8) If the Commissioners so consent, fees may be charged in connection with a
childcare account by the account provider.

(9) 25But the account provider may not charge any fees merely for—

(a) providing a childcare account,

(b) enabling a qualifying payment to be made into a childcare account (see
section 19), or

(c) enabling a payment to be made from a childcare account in respect of
30qualifying childcare for the child in respect of whom the account is
held.

(10) In this Act—

(a) the “account-holder”, in relation to a childcare account, means the
person who holds the childcare account, and

(b) 35the “account provider”, in relation to a childcare account, means the
person or body who provides the childcare account.

16 Account providers

(1) Childcare accounts may be provided by any of the following—

(a) the Commissioners for Her Majesty’s Revenue and Customs,

(b) 40a person or body with whom the Commissioners have entered into
arrangements for the provision of childcare accounts, and

(c) if the Treasury so determine, the Director of Savings (“the Director”).