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HMRC internal manual

Employment Income Manual

Benefits: Exemptions: Workplace nursery provision from 6 April 2005

Section 318 ITEPA 2003

Purpose of the legislation

For tax years from 2005/06, the purpose of the legislation is that the exemption should only apply when the narrow conditions for exemption set out below are met. Where the exemption applies, no liability to income tax arises in respect of the provision for an employee of care for a child.

The exemption does not apply to:

  • childcare provided by means of non-cash vouchers or credit tokens (but see EIM16050onwards for guidance on childcare vouchers)
  • other provision for an employee of care for a child (but see EIM22010 onwards for guidance on the limited exemption that may be available)

The exemption for workplace nurseries (see EIM21900) applies when the following four conditions are all met:

Condition A: is concerned with the child (see EIM22002)

Condition B: is concerned with the premises on which care is provided and the registration requirements (see EIM22003)

Condition C: is concerned with the person or persons who make the premises available (see EIM22004)

Condition D: is concerned with the extent to which the provision of care for a child is open to the employer’s employees (see EIM22005)

Meaning of “care”

For the purpose of the workplace nursery exemption, “care” is defined generally as any kind of care or supervised activity apart from what is provided in schools as part of the child’s compulsory education.

Meaning of “child”

A person is a “child” for the purposes of this exemption up to the last day of the week in which falls the 1 September following their 15t h birthday or their 16t h birthday if the child is disabled (see EIM22020).