Workplace Nursery Scheme - third-party / off-site

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.

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 .

For clarity, the provider mentioned in the above reply (Enjoy Benefits) is the same provider we are looking at.

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.

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. 

Hi,

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:

• The child receiving the care must be a child or stepchild of the employee maintained at least partly at the employee’s expenses, live with the employee or be a child for whom the employee has parental responsibility. You can see guidance here: EIM22002 - Benefits: Exemptions: Workplace nurseries from 6 April 2005: Condition A
• The premises on which care is provided must not be used (wholly or mainly) as a private dwelling and any applicable registration requirement must be met. You can see the guidance here: EIM22003 - Benefits: Exemptions: Workplace nurseries from 6 April 2005: Condition B
• The premises on which the care is provided must be made available by the scheme employer alone or the partnership requirements must be met. You can see guidance here: EIM22004 - Benefits: Exemptions: Workplace nurseries from 6 April 2005: Condition C
• The scheme under which care is provided must be open to the scheme employer’s employees generally or, if the employer has premises at more than one location, the scheme must be open generally to employee’s at the particular location at which the scheme operates. You can see the guidance here: EIM22005 - Benefits: Exemptions: Workplace nurseries from 6 April 2005: Condition D

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.
 

@HMRC Admin 19 Yes I am aware of all the relevant conditions and guidance. I am asking explicitly if it is HMRC's view that the Enjoy Benefits commercially marketed nursery scheme surpasses these. They believe it does and have calibrated the offering to do so. They have 1,200 UK business offering this scheme with them, so I am sure you are well aware of their service offering. I would like to know that if we enact the scheme properly with Enjoy Benefits whether it would then satisfy all the conditions you have listed above.

Hi,

As stated above, we cannot comment about the merits of any particular scheme on a public forum.

Thank you.