Childcare Payments Bill (HC Bill 7)

Childcare Payments BillPage 40

(c) any of the applicants is appealing against a decision not to allow the
applicant to open a childcare account in respect of the child.

(4) The third case is where—

(a) a person is appealing against a decision not to make an account
5restriction order in relation to another person, or

(b) a person is appealing against a decision to make an account restriction
order in relation to the person so as to enable another person to open a
childcare account or make a declaration of eligibility in relation to such
an account.

(5) 10In this section “the affected parties” means—

(a) in the case described in subsection (2), the applicants;

(b) in the case described in subsection (3), the applicants and the existing
account-holder;

(c) in the case described in subsection (4), each of the persons mentioned
15in paragraph (a) or (b) of that subsection (as the case may be).

(6) Notice of the appeal must be given to each of the affected parties (other than
the person bringing the appeal).

(7) Each of the affected parties is to be treated as a party to the appeal.

(8) If the Tribunal quashes the whole or part of the decision, it must substitute its
20own decision for that of HMRC.

(9) A decision of the Tribunal made by virtue of this section has the same effect as,
and may be enforced in the same manner as, a decision of HMRC.

(10) In this section “the Tribunal” has the same meaning as in section 59.

Compensatory payments

61 25Compensatory payments

(1) Where a person has in circumstances specified in regulations been deprived of the
opportunity to receive top-up payments in respect of a child for a period, HMRC must
pay the person an amount equal to 20% of the costs incurred on qualifying childcare in
respect of the child during the period.

(2) 30But the amount paid to a person by HMRC under this section for a period may
not exceed a maximum amount specified in, or determined in accordance with,
regulations.

(3) The circumstances that may be specified in regulations under this section
include, in particular—

(a) 35where an appealable decision is varied or cancelled on a review under
section 56, and

(b) where an appealable decision is quashed (whether wholly or partly)
under section 59.

(4) Payments may be made to a person under this section regardless of whether
40the person—

(a) has opened a childcare account, or

(b) has made a valid declaration of eligibility.

Childcare Payments BillPage 41

(5) Regulations may make further provision about making payments under this
section.

(6) Regulations may substitute a different percentage for the percentage for the
time being specified in subsection (1).

5Withdrawal of existing tax exemptions

62 Restrictions on claiming tax exemption for childcare vouchers

(1) Section 270A of ITEPA 2003 (limited exemption from income tax for qualifying
childcare vouchers) is amended as follows.

(2) In subsection (1)—

(a) 10before “employee” insert “eligible”, and

(b) at the end insert—

For the meaning of “eligible employee”, see section 270AA.

(3) In subsection (5)(a), before “employees” insert “eligible”.

(4) After section 270A of ITEPA 2003 insert—

270AA 15Eligible employees”

(1) An employee is an eligible employee for the purposes of section 270A if
conditions A to C are met in relation to the employee.

(2) Condition A is that the employee—

(a) was employed by the employer immediately before the relevant day,
20and

(b) has not ceased to be employed by the employer on or after that day.

(3) “The relevant day” means the day specified by the Treasury in regulations for
the purposes of this section.

(4) Condition B is that there has not been a period of 52 tax weeks ending on or
25after the relevant day which has not included at least one qualifying week.

(5) In subsection (4)—

  • “qualifying week” means a tax week in respect of which a qualifying
    childcare voucher has been provided for the employee under the scheme
    by the employer in respect of a child, and

  • 30“tax week” has the meaning given by section 270A(7).

(6) Condition C is that the employee has not given the employer a childcare
account notice.

(7) A “childcare account notice” is a written notice informing the employer that
the employee wishes to leave the scheme in order to be able to open a childcare
35account under section 17 of the Childcare Payments Act 2014 or enable the
employee’s partner to do so.

(8) In subsection (7) “partner” is to be read in accordance with regulations made
under section 3(5) of that Act.

(5) In section 717 of ITEPA 2003 (orders and regulations), in subsection (4), after “made
40under” insert “section 270AA(3) (exemption from income tax for qualifying childcare
vouchers: meaning of “eligible employee”) or”.

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63 Restrictions on claiming tax exemption for employer-contracted childcare

(1) Section 318A of ITEPA 2003 (childcare: limited exemption from income tax for other
care) is amended as follows.

(2) In subsection (1)—

(a) 5before “employee” insert “eligible”, and

(b) after “For” insert “the meaning of “eligible employee”, see section 318AZA,
and for”.

(3) In subsection (5)(a), before “employees” insert “eligible”.

(4) After section 318A of ITEPA 2003 insert—

318AZA 10Eligible employees”

(1) An employee is an eligible employee for the purposes of section 318A if
conditions A to C are met in relation to the employee.

(2) Condition A is that the employee—

(a) was employed by the employer immediately before the relevant day,
15and

(b) has not ceased to be employed by the employer on or after that day.

(3) “The relevant day” means the day specified by the Treasury in regulations for
the purposes of this section.

(4) Condition B is that there has not been a period of 52 tax weeks ending on or
20after the relevant day which has not included at least one qualifying week.

(5) In subsection (4)—

  • “qualifying week” means a tax week in which care for a child has been
    provided for the employee under the scheme by the employer in
    circumstances in which conditions A to D in section 318A are met,
    25and

  • “tax week” has the meaning given by section 318A(7).

(6) Condition C is that the employee has not given the employer a childcare
account notice.

(7) A “childcare account notice” is a written notice informing the employer that
30the employee wishes to leave the scheme in order to be able to open a childcare
account under section 17 of the Childcare Payments Act 2014 or enable the
employee’s partner to do so.

(8) In subsection (7) “partner” is to be read in accordance with regulations made
under section 3(5) of that Act.

(9) 35For the meaning of “care” and “child”, see section 318B.

(5) In section 318B of ITEPA 2003 (childcare: meaning of “care”, “child” etc), in
subsection (1), for “318 and 318A” substitute “318 to 318AZA”.

(6) In section 717 of ITEPA 2003 (orders and regulations), in subsection (4), before
“section 343(3)” insert “section 318AZA(3) (exemption from income tax for other
40care: meaning of “eligible employee”) or”.

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General

64 Functions of Commissioners for Revenue and Customs

The matters dealt with by and under this Act are to be under the management
of the Commissioners for Her Majesty’s Revenue and Customs.

65 5Tax treatment of top-up payments

A top-up payment made into a childcare account is not to be regarded as
income of the account-holder for the purposes of the Income Tax Acts.

66 Set-off against tax liabilities etc

The following payments are not to be regarded as a credit for the purposes of
10section 130 of the Finance Act 2008 (set-off)—

(a) top-up payments;

(b) payments under section 61 (compensatory payments);

(c) where the Commissioners provide childcare accounts, any funds held
in a childcare account.

67 15Northern Ireland

In Schedule 2 to the Northern Ireland Act 1998 (excepted matters), after
paragraph 10B insert—

10C The operation of the Childcare Payments Act 2014.

Final provisions

68 20Regulations: general

(1) Any power to make regulations under this Act is exercisable by statutory
instrument.

(2) Any power to make regulations under the following provisions of this Act is
exercisable by the Treasury—

(a) 25section 1(5) (power to amend rate of top-up payment);

(b) section 2(3)(b) to (d) (qualifying childcare);

(c) sections 3, 7 to 11 and 13 (eligibility);

(d) section 5(2) (power to alter length of entitlement period);

(e) section 14 (qualifying child);

(f) 30section 19(7) (power to amend the relevant maximum);

(g) section 29 (termination of tax credit awards);

(h) section 30 (power to provide for automatic termination of universal
credit);

(i) sections 31(5) and 32(5) (power to disqualify tax credit or universal
35credit claimants from obtaining top-up payments: changes of
circumstances);

(j) sections 42(5), 43(6) and 45(5) (powers to vary certain penalties);

(k) section 49(4) (power to alter period for which directions under section
49 have effect);

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(l) section 61(6) (power to amend rate of compensatory payments);

(m) section 71 (power to make consequential amendments);

(n) section 74 (commencement).

(3) Any power to make regulations under a provision of this Act that is not
5mentioned in subsection (2) is exercisable by the Commissioners for Her
Majesty’s Revenue and Customs.

(4) Regulations under this Act may—

(a) make different provision for different purposes or in relation to
different areas,

(b) 10contain incidental, supplemental, consequential or transitional
provision or savings, and

(c) provide for a person to exercise a discretion in dealing with any matter.

(5) Subsection (4) does not apply to regulations under section 74 (see instead
subsection (3) of that section).

69 15Regulations: Parliamentary control

(1) A statutory instrument containing regulations under this Act is subject to
annulment in pursuance of a resolution of either House of Parliament, unless
the instrument—

(a) is required by subsection (3) or any other enactment to be laid in draft
20before, and approved by a resolution of, each House, or

(b) contains only regulations under section 74.

(2) Subsection (3) applies to a statutory instrument that contains (with or without
other provisions)—

(a) regulations under section 1(5);

(b) 25regulations under section 2(3)(b), (c) or (d);

(c) the first regulations under each of sections 3 and 7 to 10;

(d) regulations under section 5(2);

(e) the first regulations under section 14;

(f) regulations under section 19(7) which substitute a lower amount for
30any amount for the time being specified in section 19(5);

(g) regulations under section 30;

(h) regulations under section 31(6) or 32(6);

(i) regulations under section 42(5), 43(6) or 45(5);

(j) regulations under section 49(4);

(k) 35regulations under section 61(6);

(l) regulations under section 71.

(3) A statutory instrument to which this subsection applies may not be made
unless a draft of the instrument has been laid before, and approved by a
resolution of, each House of Parliament.

70 40Interpretation

(1) In this Act—

  • “account-holder” has the meaning given by section 15(10);

  • “account provider” has the meaning given by section 15(10);

  • “appealable decision” has the meaning given by section 55(3);

  • Childcare Payments BillPage 45

  • “childcare” has the meaning given by section 2(1);

  • “childcare account” has the meaning given by section 15;

  • “the Commissioners” means the Commissioners for Her Majesty’s
    Revenue and Customs;

  • 5“declaration of eligibility” has the meaning given by section 4;

  • “enactment” includes—

    (a)

    an enactment contained in subordinate legislation,

    (b)

    an enactment contained in, or in an instrument made under, an
    Act of the Scottish Parliament,

    (c)

    10an enactment contained in, or in an instrument made under, a
    Measure or Act of the National Assembly for Wales, and

    (d)

    an enactment contained in, or in an instrument made under,
    Northern Ireland legislation;

  • “entitlement period” means a period determined in accordance with
    15section 5;

  • HMRC” means Her Majesty’s Revenue and Customs;

  • ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;

  • “partner” is to be read in accordance with regulations made under section
    3(5);

  • 20“permitted payment” has the meaning given by section 20(3);

  • “prohibited payment” has the meaning given by section 20(4);

  • “qualifying child” has the meaning given by section 14;

  • “qualifying childcare” has the meaning given by section 2(2);

  • “qualifying payment” has the meaning given by section 19;

  • 25“tax credit” has the same meaning as in the Tax Credits Act 2002;

  • “top-up element”, in relation to an amount, has the meaning given by
    section 21;

  • “top-up payment” is to be read in accordance with section 1;

  • “universal credit” means universal credit payable under—

    (a)

    30Part 1 of the Welfare Reform Act 2012, or

    (b)

    any provision made for Northern Ireland which corresponds to
    that Part of that Act.

(2) In this Act—

(a) references to a valid declaration of eligibility are to be read in
35accordance with section 4(2), and

(b) references to an active childcare account are to be read in accordance
with section 17(3).

71 Power to make consequential amendments

(1) Regulations may make such provision amending, repealing, revoking or
40applying with modifications any enactment to which this section applies as the
Treasury consider necessary or expedient in consequence of any provision
made by or under this Act.

(2) This section applies to—

(a) any enactment passed or made before the passing of this Act, and

(b) 45any enactment passed or made on or before the last day of the Session
in which this Act is passed.

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72 Financial provisions

(1) There is to be paid out of money provided by Parliament any increase attributable to
this Act in the sums payable under any other Act out of money so provided.

(2) Subsections (3) and (4) apply if childcare accounts are provided by the
5Commissioners or the Director of Savings (“the relevant account provider”).

(3) Sums paid into childcare accounts are not to be paid into the Consolidated
Fund.

(4) Sums payable from childcare accounts are not to be regarded as expenditure of
the relevant account provider.

73 10Extent

This Act extends to England and Wales, Scotland and Northern Ireland.

74 Commencement and short title

(1) The following provisions of this Act come into force on the day on which this
Act is passed—

(a) 15sections 64 and 67;

(b) sections 68 to 71, 72(1), 73 and this section;

(c) any power to make regulations under this Act.

(2) The remaining provisions of this Act come into force in accordance with
provision contained in regulations.

(3) 20Regulations under subsection (2) may—

(a) make different provision for different purposes or in relation to
different areas;

(b) make such transitory or transitional provision, or savings, as the
Treasury consider necessary or expedient, including (in particular)
25such adaptations of provisions of this Act brought into force as appear
to be necessary or expedient in consequence of other provisions of this
Act not yet having come into force.

(4) This Act may be cited as the Childcare Payments Act 2014.