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HMRC has recently issued new guidance encouraging employers to ensure that they meet the 'partnership requirements' for claiming the workplace nursery tax exemption. This exemption is a significant benefit for employees, as it allows for the care of their children without incurring an income tax charge, provided certain conditions are met. Typically, this benefit is offered through a salary sacrifice arrangement.

HMRC has also addressed the issue of some workplace nursery scheme operators advertising their services as HMRC-approved. HMRC clarifies that it never gives approval for a business to advertise a scheme as tax compliant.

To qualify for the tax exemption, several aspects must be in place. The new guidance focuses on the care being provided at premises that are either exclusively available to the employer or shared in a manner that meets the partnership requirements. These requirements include that:

• Employers must accept 'material financial responsibility'.
• There must be significant input and influence from the employer on management decisions at the nursery and the manner in which childcare is provided.

Employers can partner with commercial nurseries to provide childcare. However, HMRC has identified some workplace nursery scheme operators whose services may not meet the partnership requirements. The new guidance clarifies these requirements to ensure compliance.

For more detail and guidance for employers who may have incorrectly applied the exemption, read our 'Employers providing workplace nurseries - do they qualify for tax exemption?' article. 

If you need any assistance, please contact Susan Ball or your usual 91̽��contact.