In general childcare or home help services are not tax deductible, although there has been some debate about whether they should be. In his 1990 Budget the then Chancellor John Major announced that from April 1990 employees would not be taxed on the benefits they received from using a nursery or playscheme provided by their employer. In its 2004 Budget the Labour Government announced a new tax relief for childcare benefits: from April 2005, employees would be entitled to receive up to 50 [pounds] a week of childcare free of income tax and National Insurance contributions (NICs) where their employers contracted with an approved childcarer or provided childcare vouchers for the purpose of paying an approved childcarer. Employers would be entitled to a similar relief for the first 50 [pounds] of this type of childcare for the purposes of both secondary Class 1 NICs and Class 1A NICs. This limit was increased by 5 [pounds] to 55 [pounds] from April 2006. In September 2009 the then Prime Minister, Gordon Brown, proposed that this relief should be withdrawn to fund the extension of free childcare for two year olds. The proposal proved highly contentious and in December 2009 Mr Brown announced that the relief would be retained, but, from April 2011, it would be restricted in value so that all new voucher recipients would get the same amount of tax relief, to ensure that higher rate taxpayers did not benefit disproportionately. In its first Budget in June 2011 the Coalition Government confirmed that it would take this measure forward. The new income tax limit applies to higher rate and additional rate taxpayers who join employer-supported childcare schemes on or after 6 April 2011. This note discusses the introduction of the existing tax relief for employer-provided childcare and the case there has been made for a wider tax relief, before looking at the decision to restrict the value of this relief for those on higher incomes from 2011/12. Two other Library notes give an overview of Government policies on childcare since 1997. (author abstract)