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HMRC internal manual

Employment Income Manual

Benefits: exemption for workplace nurseries: meaning of childcare to 5 April 2005

Section 318 ITEPA 2003

For the purpose of the workplace nursery exemption (see EIM21905), “care” includes any form of care or supervised activity, whether or not it is provided on a regular basis. It does not include supervised activity that is provided primarily for educational purposes. The presence of some educational input does not preclude exemption.

The exemption will therefore extend to care provided in nurseries, creches and play schemes, including those that operate only during school holidays, as long as the statutory conditions are met. It will not extend to care provided for children attending nursery schools or preparatory schools. However, such schools can still provide qualifying facilities for their own staff.

Remember that before 6 April 2005 the exemption does not apply at all if the care is taxable as earnings within Section 62 ITEPA 2003, for example because the childcare has been paid for out of the employee’s earnings or the childcare represents an application of the employee’s earnings.