Finance Bill

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 13 — Childcare and childcare vouchers
330

custody institution or, in Scotland, a young offenders’ institution)
who is regarded as receiving free in-patient treatment within the
meaning of the Social Security (Hospital In-Patients) Regulations
1975 or the Social Security (Hospital In-Patients) Regulations
(Northern Ireland) 1975.
5
(5)
For the purposes of sections 318 and 318A “parental responsibility”
means all the rights, duties, powers, responsibilities and authority
which by law a parent of a child has in relation to the child and the
child’s property.
(6)
In this section and section 318C “local authority” means—
10
(a)
in relation to England, the council of a county or district, a
metropolitan district, a London Borough, the Common
Council of the City of London or the Council of the Isles of
Scilly;
(b)
in relation to Wales, the council of a county or county
15
borough;
(c)
in relation to Scotland, a council constituted under section 2
of the Local Government etc. (Scotland) Act 1994.
318C   Childcare: meaning of “qualifying child care”
(1)
For the purposes of section 318A “qualifying child care” means
20
registered or approved care within any of subsections (2) to (6) below
that is not excluded by subsection (7) below.
(2)
Care provided for a child in England is registered or approved care
if it is provided—
(a)
by a person registered under Part 10A of the Children Act
25
1989,
(b)
by a school or establishment that does not need to be
registered under that Part to provide the care because of an
exemption under paragraph 1 or 2 of Schedule 9A to that Act,
(c)
in the case of care provided for a child out of school hours
30
between the child’s 8th birthday and the last day on which he
is treated as being a child, by a school on school premises or
by a local authority, or
(d)
by a child care provider approved by an accredited
organisation within the meaning of regulation 14 of the Tax
35
Credit (New Category of Child Care Provider) Regulations
1999,
(e)
wholly or mainly in the child’s home by a child care provider
approved in accordance with the Tax Credits (Approval of
Home Child Care Providers) Scheme 2003, or
40
(f)
by a domiciliary care worker under the Domiciliary Care
Agencies Regulations 2002.
(3)
Care provided for a child in Wales is registered or approved care if it
is provided—
(a)
by a person registered under Part 10A of the Children Act
45
1989,
(b)
by a school or establishment that does not need to be
registered under that Part to provide the care because of an

Finance Bill
Schedule 13 — Childcare and childcare vouchers
331

exemption under paragraph 1 or 2 of Schedule 9A to that Act,
or
(c)
in the case of care provided for a child out of school hours
between the child’s 8th birthday and the last day on which he
is treated as being a child, by a school on school premises or
5
by a local authority.
(4)
Care provided for a child in Scotland is registered or approved care
if it is provided—
(a)
by a person in circumstances where the care service provided
by him—
10
(i)
consists of child minding or of day care of children
within the meaning of section 2 of the Regulation of
Care (Scotland) Act 2001, and
(ii)
is registered under Part 1 of that Act, or
(b)
by a local authority in circumstances where the care service
15
provided by the local authority—
(i)
consists of child minding or of day care of children
within the meaning of section 2 of the Regulation of
Care (Scotland) Act 2001, and
(ii)
is registered under Part 2 of that Act.
20
(5)
Care provided for a child in Northern Ireland is registered or
approved care if it is provided—
(a)
by a person registered under Part XI of the Children
(Northern Ireland) Order 1995, or
(b)
by an institution or establishment that does not need to be
25
registered under that Part to provide the care because of an
exemption under Article 121 of that Order, or
(c)
in the case of care provided for a child out of school hours
between the child’s 12th birthday and the last day on which
he is treated as being a child, by a school on school premises
30
or by an education and library board or an HSS trust.
(6)
Care provided for a child outside the United Kingdom is registered
or approved child care if it is provided by a child care provider
approved by an accredited organisation within the meaning of
regulation 4 of the Tax Credits (New Category of Child Care
35
Provider) Regulations 2002.
(7)
Child care is excluded from section 318A—
(a)
if it is provided by the partner of the employee in question, or
(b)
if it is provided by a relative of the child wholly or mainly in
the child’s home or (if different) the home of a person having
40
parental responsibility for the child.
(8)
In subsection (7)—

“partner” means one of a married or unmarried couple; and

“relative” means parent, grandparent, aunt, uncle, brother or
sister, whether by blood, half blood or marriage.
45

Finance Bill
Schedule 13 — Childcare and childcare vouchers
332

318D Childcare: power to vary exempt amount and qualifying conditions
(1)
The Treasury may by order amend section 318A(6) (employer-
contracted care: the exempt amount) so as to substitute a different
sum of money for that for the time being specified.
(2)
The Treasury may by regulations make such amendments of the
5
provisions of sections 318 to 318C relating to the qualifying
conditions for the exemptions conferred by sections 318 and 318A as
appear to them appropriate having regard to the corresponding
provisions of regulations under section 12 of the Tax Credits Act
2002 relating to entitlement to the child care element of working tax
10
credit.”.
Childcare vouchers
2     (1)
Chapter 4 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1)
(taxable benefits: vouchers and credit-tokens) is amended as follows.
      (2)
In section 84 (meaning of “non-cash voucher”)—
15
(a)
in subsection (1), after paragraph (a) insert—
“(ab)
a childcare voucher,”, and
(b)
after subsection (2) insert—
“(2A)
In this Chapter “childcare voucher” means a voucher, stamp
or similar document or token intended to enable a person to
20
obtain the provision of care for a child (whether or not in
exchange for it).”.
      (3)
In section 87 (benefit of non-cash voucher treated as earnings), after
subsection (3) insert—
“(3A)
In the case of a childcare voucher, the reference in subsection (3)(b)
25
to the services for which the voucher is capable of being exchanged
is to the provision of care for a child which may be obtained by using
it.”.
      (4)
In section 95 (disregard for money, goods or services obtained), after
subsection (3) insert—
30
“(3A)
In the case of a childcare voucher, the reference in subsection (2)(a)
to the services obtained in exchange for the voucher is to the
provision of care for a child obtained by using it.”.
3
In Chapter 6 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003
(exemptions: non-cash vouchers and credit-tokens), after section 270
35
insert—
“270A
   Limited exemption for qualifying childcare vouchers
(1)
If qualifying childcare vouchers are provided for an employee,
liability to income tax by virtue of Chapter 4 of Part 3 (taxable
benefits: vouchers and credit tokens) arises only in respect of so
40
much of the cash equivalent of the benefit as exceeds the exempt
amount.
(2)
A “qualifying childcare voucher” means a non-cash voucher in
relation to which Conditions A to C are met.

Finance Bill
Schedule 14 — Vans
333

(3)
Condition A is that the voucher is provided to enable an employee to
obtain care for a child who—
(a)
is a child or stepchild of the employee and is maintained
(wholly or partly) at the employee’s expense, or
(b)
is resident with the employee and is a person in respect of
5
whom the employee has parental responsibility.
(4)
Condition B is that the voucher can only be used to obtain qualifying
child care.
(5)
Condition C is that the vouchers are provided under a scheme that is
open—
10
(a)
to the employer’s employees generally, or
(b)
generally to those at a particular location.
(6)
For the purposes of this section the “exempt amount”, in any tax
year, is £50 for each qualifying week in that year.
(7)
A “qualifying week” means a tax week in respect of which a
15
qualifying childcare voucher is received.

A “tax week” means one of the successive periods in a tax year
beginning with the first day of that year and every seventh day after
that (so that the last day of a tax year or, in the case of a tax year
ending in a leap year, the last two days is treated as a separate week).
20
(8)
An employee is only entitled to one exempt amount even if care is
provided for more than one child.

But it does not matter that another person may also be entitled to an
exempt amount in respect of the same child.
(9)
An employee is not entitled to an exempt amount under this section
25
and under section 318A (limited exemption for employer-contracted
childcare) in respect of the same tax week.
(10)
In this section “care”, “child”, “parental responsibility” and
“qualifying child care” have the same meaning as in section 318A
(see sections 318B and 318C).
30
(11)
The powers conferred by section 318D (childcare: power to vary
exempt amount and qualifying conditions) are exercisable—
(a)
in relation to the exempt amount specified in subsection (6)
above as in relation to the exempt amount specified in section
318A(6), and
35
(b)
in relation to the qualifying conditions for the exemption
conferred by this section as in relation to the qualifying
conditions for the exemption conferred by section 318A.”.
Schedule 14
Section 80

Vans
40
1
The Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as
follows.
2     (1)
Section 114 (cars, vans and related benefits) is amended as follows.

Finance Bill
Schedule 14 — Vans
334

      (2)
In subsection (2), in paragraph (c), for “166” substitute “159” and after that
paragraph insert “; and
(d)
sections 160 to 164 provide for the cash equivalent of the
benefit of any fuel provided for the van to be treated as
earnings in certain circumstances.”
5
      (3)
After subsection (3) insert—
“(3A)
This Chapter does not apply to a van in relation to a tax year if the
private use of the van during the tax year by the employee or
member of the employee’s family or household is insignificant.”
      (4)
In subsection (4), insert at the end—
10

“section 169A (van available to more than one member of family or
household employed by same employer).”
3
In section 116(2) (when car is first made available and last day on which car
is available), after “car”, in each place, insert “or van”.
4
In section 119 (where alternative to benefit of car offered), after “car”, in each
15
place (including the heading), insert “or van”.
5
For sections 155 to 166 substitute—
“155
Cash equivalent of the benefit of a van
(1)
What is the cash equivalent of the benefit of a van for a tax year
depends on whether or not the restricted private use condition is met
20
in relation to the van for the year.
(2)
The cash equivalent of the benefit of the van for the year is—
(a)
nil if that condition is met in relation to the van for the tax
year, and
(b)
the amount given by subsection (3) if it is not.
25
(3)
That amount is—
(a)
where the tax year is the tax year 2005-06 or 2006-07—
(i)
£500 if the age of the van is less than 4 years at the end
of the tax year, and
(ii)
£350 in any other case, and
30
(b)
where the tax year is a later tax year, £3,000.
(4)
The restricted private use condition is met in relation to a van for a
tax year if—
(a)
the commuter use requirement is satisfied throughout the
year (or the part of the year on which it is available to the
35
employee) or the extent to which it is not satisfied during that
period is insignificant, and
(b)
the business travel requirement is satisfied throughout the
year (or the part of the year on which it is available to the
employee).
40
(5)
The commuter use requirement is satisfied at any time if—
(a)
the terms on which the van is available to the employee at the
time prohibit its private use otherwise than for the purposes
of ordinary commuting or travel between two places that is

Finance Bill
Schedule 14 — Vans
335

for practical purposes substantially ordinary commuting,
and
(b)
neither the employee nor a member of the employee’s family
or household makes private use of the van at the time
otherwise than for those purposes.
5
(6)
In subsection (5) “ordinary commuting” has the same meaning as in
section 338 (travel for necessary attendance) (see subsection (3) of
that section).
(7)
The business travel requirement is satisfied at a time if the van is
available to the employee at the time mainly for use for the purposes
10
of the employee’s business travel (see section 171(1)).
(8)
The cash equivalent of the van may be reduced—
(a)
under section 156 for any periods when the van is
unavailable,
(b)
under section 157 where the van is shared, and
15
(c)
under section 158 in respect of payments by the employee for
the private use of the van.
Vans: reductions of cash equivalent
156
Reduction for periods when van unavailable
(1)
The cash equivalent of the benefit of a van for a tax year under
20
section 155(2)(a) or (b) is to be reduced if the van has been
unavailable on any day during the year.
(2)
For the purposes of this section a van is unavailable on any day if the
day—
(a)
falls before the first day on which the van is available to the
25
employee,
(b)
falls after the last day on which the van is available to the
employee, or
(c)
falls within a period of 30 days or more throughout which the
van is not available to the employee.
30
(3)
The amount of the reduction is given by the formula—
where—
U is the number of days in the year on which the van is
unavailable,
Y is the number of days in the year, and
35
CE is the amount of the cash equivalent before any reduction.
157
Reduction of cash equivalent where van is shared
(1)
This section applies if in a tax year a van—
(a)
is available to more than one employee concurrently,
(b)
is so made available by the same employer, and
40
(c)
is available concurrently for each employee’s private use.

Finance Bill
Schedule 14 — Vans
336

(2)
The cash equivalent of the benefit of the van to each of those
employees for that year—
(a)
is to be calculated separately under sections 155 and 156, and
(b)
is then to be reduced on a just and reasonable basis.
(3)
If —
5
(a)
any of the employees mentioned in subsection (1)(a) (“E”) is
a member of the family or household of another of them
(“M”), and
(b)
E’s employment is an excluded employment,

the availability of the van to E is to be disregarded when applying
10
subsection (2)(b) in respect of M.
(4)
In this section the reference to the van being available for each
employee’s private use includes a reference to the van being
available for the private use of a member of the employee’s family or
household.
15
158
Reduction for payments for private use
(1)
The cash equivalent of the benefit of a van for a tax year under
section 155(2)(a) or (b) (after any reduction under sections 156 and
157) is to be reduced if, as a condition of the van being available for
the employee’s private use, the employee—
20
(a)
is required in that year to pay (whether by way of deduction
from earnings or otherwise) an amount of money for that use,
and
(b)
makes such payment.
(2)
If the amount paid by the employee in respect of that year is equal to
25
or exceeds that cash equivalent, it is reduced to nil.
(3)
In any other case that cash equivalent is reduced by the amount paid
by the employee.
(4)
In this section the reference to the van being available for the
employee’s private use includes a reference to the van being
30
available for the private use of a member of the employee’s family or
household.
159
Modification of provisions where van temporarily replaced
(1)
This section applies if—
(a)
the van normally available to an employee (“the normal
35
van”) is not available to the employee for a period of less than
30 days,
(b)
another van (“the replacement van”) is made available to the
employee in order to replace the normal van for the whole or
part of that period, and
40
(c)
the employee is chargeable to tax in respect of both the
normal van and the replacement van by virtue of section 154.
(2)
If this section applies—
(a)
section 156 applies so that the replacement van is to be
treated as unavailable on the days during the period on
45
which it replaces the normal van, and