Commentary on Sections Withdrawal of Existing Tax Exemptions Section 63: Restrictions on claiming tax exemption for childcare vouchers and section 64: Restrictions on claiming tax exemption for employer-contracted childcare
275.Sections 63 and 64 amend the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) to restrict the availability of the existing tax exemptions for childcare vouchers and directly-contracted childcare (referred to here together as Employer-Supported Childcare). The purpose of the section is to make the tax exemption unavailable to those not already in an Employer-Supported Childcare scheme on a day which will be specified in regulations under the provisions being inserted in ITEPA.
276.Subsections (2) and (3) of each section amend sections 270A and 318A of ITEPA, adding to them the concept of an ‘eligible employee’. In order for an employee to continue to be eligible for the exemption from income tax for Employer-Supported Childcare, they will need to be an ‘eligible employee’.
277.Subsection (4) of each section inserts new sections 270AA and 318AZA after sections 270A and 318A of ITEPA and defines what is meant by an eligible employee. An employee will need to meet three eligibility conditions to be an eligible employee:
	they were employed by their employer before the relevant day and have not ceased to be employed by that employer on or after that day;
	they have been in receipt of Employer-Supported Childcare at least once in a period of 52 weeks ending on or after the relevant day; and
	they have not given their employer a ‘childcare account notice’ to say that they no longer want to receive Employer-Supported Childcare, so that they or their partner can open a childcare account.
278.Together, these conditions mean that an employee who was already in an Employer-Supported Childcare scheme on the relevant day will be able to continue to receive the tax exemption, as long as they have not voluntarily given up the tax exemption in order to move into the new scheme provided for by the Act.