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Finance Bill
Schedule 13 — Childcare and childcare vouchers

346

 

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 organisation

accredited under the Tax Credit (New Category of Child Care

35

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

(f)   

by a domiciliary care worker under the Domiciliary Care

40

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

1989,

45

(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,

 

 

Finance Bill
Schedule 13 — Childcare and childcare vouchers

347

 

(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

by a local authority, or

(d)   

by a child care provider approved by an organisation

5

accredited under the Tax Credit (New Category of Child Care

Provider) Regulations 1999.

(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

10

by him—

(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

15

(b)   

by a local authority in circumstances where the care service

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

20

(ii)   

is registered under Part 2 of that Act.

(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

25

(b)   

by an institution or establishment that does not need to be

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

30

he is treated as being a child, by a school on school premises

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 organisation accredited under the Tax Credit (New

35

Category of Child Care 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.

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Finance Bill
Schedule 13 — Childcare and childcare vouchers

348

 

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

349

 

(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

350

 

      (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

351

 

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—equation: cross[over[char[U],char[Y]],times[char[C],char[E]]]

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

352

 

(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

 

 

 
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