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Posted Thu, 21 Sep 2023 11:36:54 GMT by tjm1987
Hi there. I am seeking some clarity on the legitimacy of an advertised option from the nursery my daughter is booked to attend (full-time) from Jan 2024. They (the nursery) have partnered with a third-party provider which purportedly enables my employer to contract with the nursery and provided there's a financial commitment (around £100 a month) and my agreement to be involved with the direction of those contributed funds / taking an active part in the management of the nursery, I am then (apparently!) able to pay the nursery fees effectively as part of a salary sacrifice agreement (potentially offering up a significant 'saving' on the fees). I have been unable to find anything official on this type of setup - is it possible to clarify the position on whether these schemes are valid for both me and my employer? Many thanks.
Posted Tue, 26 Sep 2023 10:34:20 GMT by twissticles
Hi, I am the MD for a firm looking to potentially implement this scheme for our employees. I have looked into it in detail including reading the the ITEPA EIM21971 and the 2010 Tribunal (TC/2010/05155) between Lotus Group Limited and The Commissioners For Her Majesty's Revenue and Customs which ruled in favour of Lotus Group Limited provision of an earlier version of an Offsite Workplace Nursery Scheme. We are investigating implementing the scheme with Enjoy Benefits and believe that their scheme passes the two required tests - the management test and the financing test. It would be great if HRMC could confirm that they believe correctly run offsite workplace nursery schemes are compliant as it is a material benefit to hard pressed working parents and a key to retaining particularly working mothers who might otherwise choose not to return to work. With best wishes, 

Name removed admin .
Posted Wed, 27 Sep 2023 12:21:36 GMT by tjm1987
For clarity, the provider mentioned in the above reply (Enjoy Benefits) is the same provider we are looking at.
Posted Tue, 10 Oct 2023 13:26:22 GMT by HMRC Admin 32
Hi twissticles,

In order for a workplace nursery to be exemp from reporting as long as the following apply:
  • have the appropriate registrations and approvals
  • be available to all your employees
  • provide childcare for your employees’ children, or children they have parental responsibility for
  • provide childcare up to the maximum age its registration and approval allows for.                  
If all of these criteria points are satisfied then the cost of the place at the workplace nursery meets the exemption and is not reportable or liable for any tax or NI deductions.

Thank you.
Posted Thu, 12 Oct 2023 07:25:31 GMT by HMRC Admin 20
Hi tjm1987,

Salary sacrifice schemes are agreements made between employers and employees where: an employee gives up part of their regular wages or salary in return for some form of non-cash benefit, and the employer alters the employee's terms and conditions of employment relating to pay.
We cannot: give advice on the merits of a scheme, give advance ruling on whether or not a scheme is successful. Comment on the arrangements as schemes are a matter of employment law not tax law.

Thank you. 
Posted Wed, 29 Nov 2023 09:12:57 GMT by HMRC Admin 19

After reviewing the above from our internal stakeholders, we would like to post a change from the original answer and is provided here:

For the workplace nursery Income Tax exemption at section 318 ITEPA 2003 to apply, the following conditions must be met: In order to meet the partnership requirements, the employer must be wholly or partly responsible for financing and managing the provision of the care. HMRC’s view on these tests can be seen here: EIM22007 - Benefits: Exemptions: Workplace nurseries from 6 April 2005: responsibility for financing and managing the provision of childcare

HMRC’s view on commercially marketed nursery schemes can be seen in the following guidance:

EIM21970 - Benefits: exemption for workplace nurseries: commercially marketed nursery schemes: background: how the schemes work: contents

EIM21971 - Benefits: exemption for workplace nurseries: commercially marketed nursery schemes: tax consequences

Thank you.

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