Finance (No. 3) Bill

Session 2010 - 11
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Finance (No. 3) Bill

Finance (No. 3) Bill
Schedule 8 — Reduction in childcare relief for higher earners
157

      (3)
An election made before the day on which this Act is passed must be made
by notice in writing to an officer of Revenue and Customs.
      (4)
Schedule 1A to TMA 1970 does not apply to an election made before the day
on which this Act is passed.
Schedule 8
5
Section 35

Reduction in childcare relief for higher earners
Introduction
1
ITEPA 2003 is amended as follows.
Childcare vouchers
2     (1)
Section 270A (limited exemption for qualifying childcare vouchers) is
10
amended as follows.
      (2)
In subsection (2), for “C” substitute “D”.
      (3)
After subsection (5B) (inserted by section 36) insert—
“(5C)
Condition D is that the employer has, at the required time, made an
estimate of the employee’s relevant earnings amount for the tax year
15
in respect of which the voucher is provided (see section 270B).”
      (4)
In paragraph (a) of subsection (6), for “£55” substitute “the appropriate
amount”.
      (5)
After that subsection insert—
“(6ZA)
In subsection (6)(a) “the appropriate amount”, in the case of an
20
employee, means—
(a)
if the relevant earnings amount in the case of the employee
for the tax year, as estimated in accordance with subsection
(5C), exceeds the higher rate limit for the tax year, £22,
(b)
if the relevant earnings amount in the case of the employee
25
for the tax year, as so estimated, exceeds the basic rate limit
for the tax year but does not exceed the higher rate limit for
the tax year, £28, and
(c)
otherwise, £55.”
      (6)
In subsection (11)—
30
(a)
for “exempt amount” (in each place) substitute “amounts”,
(b)
for “(6) above” substitute “(6ZA) above”, and
(c)
for “318A(6)” substitute “318A(6A)”.
3
After section 270A insert—
“270B
Meaning of “relevant earnings amount” and “required time”
35
(1)
For the purposes of section 270A, the “relevant earnings amount”, in
the case of an employee provided with vouchers by an employer for
any qualifying week in a tax year, means—
(a)
the aggregate of—

Finance (No. 3) Bill
Schedule 8 — Reduction in childcare relief for higher earners
158

(i)
the amount of any relevant earnings for the tax year
from employment by the employer, and
(ii)
any amounts treated under Chapters 2 to 12 of Part 3
as earnings from such employment, less
(b)
the aggregate of any excluded amounts.
5
(2)
But if the employee becomes employed by the employer during the
tax year, what would otherwise be the amount of the aggregate
mentioned in subsection (1)(a) is the relevant multiple of that
amount; and the relevant multiple is—
where RD is the number of days in the period beginning with the day
10
on which the employee becomes employed by the employer and
ending with the tax year.
(3)
In subsection (1)(a) “relevant earnings” means—
(a)
salary, wages or fees, and
(b)
any other earnings to which the employee is contractually
15
entitled (without the exercise of discretion by any person).
(4)
For the purposes of subsection (1)(b) the following are “excluded
amounts”—
(a)
contributions under a registered pension scheme allowed
under section 193(2) of FA 2004 (relief under net pay
20
arrangements) to be deducted by the employer from the
employee’s employment income for the tax year;
(b)
donations for which a deduction is made under section 713
(payroll giving) in calculating the employee’s net taxable
earnings from employment by the employer for the tax year;
25
(c)
expenses within Chapter 3 of Part 3 (expenses payments)
which the employer is authorised to exclude from the
employee’s taxable earnings for the tax year in accordance
with PAYE regulations;
(d)
payments in respect of removal expenses to which section
30
271 applies (as defined in section 272) and which are taxable
earnings of the employee from employment by the employer
for the tax year;
(e)
the amount of any allowance under Part 3 of ITA 2007 to
which the employee is shown to be entitled in the code
35
determined in accordance with PAYE regulations for use by
the employer in respect of the employee for the tax year.
(5)
In section 270A “the required time”, in the case of an employee,
means—
(a)
if the employee joins the scheme under which the vouchers
40
are provided at a time during the tax year, that time, and
(b)
otherwise, the beginning of the tax year.
(6)
For the purposes of subsection (5)(a) the employee is taken to join the
scheme as soon as—
(a)
the employer has agreed that vouchers will be provided
45
under the scheme for the employee, and

Finance (No. 3) Bill
Schedule 8 — Reduction in childcare relief for higher earners
159

(b)
there is a child falling within section 270A(3)(a) or (b) in
relation to the employee.
(7)
The Treasury may by order amend this section.”
Childcare provided otherwise than at employer’s premises etc
4     (1)
Section 318A (limited exemption for childcare provided otherwise than at
5
employer’s premises etc) is amended as follows.
      (2)
In subsection (1), for “C” substitute “D”.
      (3)
After subsection (5B) (inserted by section 36) insert—
“(5C)
Condition D is that the employer has, at the required time, made an
estimate of the employee’s relevant earnings amount for the tax year
10
in respect of which the care is provided (see section 318AA).”
      (4)
In subsection (6), for “£55” substitute “the appropriate amount”.
      (5)
After that subsection insert—
“(6A)
In subsection (6) “the appropriate amount”, in the case of an
employee, means—
15
(a)
if the relevant earnings amount in the case of the employee
for the tax year, as estimated in accordance with subsection
(5C), exceeds the higher rate limit for the tax year, £22,
(b)
if the relevant earnings amount in the case of the employee
for the tax year, as so estimated, exceeds the basic rate limit
20
for the tax year but does not exceed the higher rate limit for
the tax year, £28, and
(c)
otherwise, £55.”
5
After section 318A insert—
“318AA
Meaning of “relevant earnings amount” and “required time”
25
(1)
For the purposes of section 318A, “relevant earnings amount”, in the
case of an employee provided with care by an employer for any
qualifying week in a tax year, means—
(a)
the aggregate of—
(i)
the amount of any relevant earnings for the tax year
30
from employment by the employer, and
(ii)
any amounts treated under Chapters 2 to 12 of Part 3
as earnings from such employment, less
(b)
the aggregate of any excluded amounts.
(2)
But if the employee becomes employed by the employer during the
35
tax year, what would otherwise be the amount of the aggregate
mentioned in subsection (1)(a) is the relevant multiple of that
amount; and the relevant multiple is—
where RD is the number of days in the period beginning with the day
on which the employee becomes employed by the employer and
40
ending with the tax year.

Finance (No. 3) Bill
Schedule 8 — Reduction in childcare relief for higher earners
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(3)
In subsection (1)(a) “relevant earnings” has the same meaning as in
subsection (1)(a) of section 270B (see subsection (3) of that section).
(4)
Subsection (4) of section 270B (excluded amounts) applies for the
purposes of subsection (1)(b).
(5)
In section 318A “the required time”, in the case of an employee,
5
means—
(a)
if the employee joins the scheme under which the care is
provided at a time during the tax year, that time, and
(b)
otherwise, the beginning of the tax year.
(6)
For the purposes of subsection (5)(a) the employee is taken to join the
10
scheme as soon as—
(a)
the employer has agreed that care will be provided under the
scheme for the employee, and
(b)
there is a child falling within section 318A(3)(a) or (b) in
relation to the employee.
15
(7)
The Treasury may by order amend this section.”
6
In subsection (1) of section 318D (childcare: power to vary exempt
amount)—
(a)
for “318A(6)” substitute “318A(6A)”, and
(b)
for “exempt amount) so as to substitute a different sum of money for
20
that” substitute “amounts which are the exempt amount) so as to
substitute different sums of money for those”;

and, accordingly, in the heading of that section, after “vary” insert “amounts
which are the”.
Commencement and transitional provision
25
7
The amendments made by this Schedule have effect for the tax year 2011-12
and subsequent tax years.
8     (1)
But the amendments made by paragraphs 2(2) to (5) and 3 to 5 do not apply
for a tax week in the case of an employee and employer and a scheme if—
(a)
the employee joined the scheme before 6 April 2011,
30
(b)
the employee has not ceased to be employed by the employer during
the period beginning with that date and ending with the tax week,
and
(c)
during that period there has not been a continuous period of 52
weeks throughout which vouchers were not, or care was not, being
35
provided for the employee under the scheme.
      (2)
For the purposes of sub-paragraph (1) the employee is taken to join the
scheme as soon as—
(a)
the employer has agreed that vouchers, or care, will be provided
under the scheme for the employee, and
40
(b)
there is a child falling within section 270A(3)(a) or (b), or section
318A(3)(a) or (b), of ITEPA 2003 in relation to the employee.
9
The amendments made by paragraphs 2(6) and 6 do not prevent the making
of provision under section 270A(11)(a) or 318D(1) of ITEPA 2003 in relation
to sections 270A(6) and 318A(6) of that Act as, by virtue of paragraph 8, they
45
continue to have effect otherwise than as amended by this Schedule.