Income Tax (Earnings and Pensions) Act 2003 section 318

Childcare: exemption for employer-provided care

Section 318 provides an income tax exemption for employer-provided childcare — commonly known as a "workplace nursery" exemption — where four specific conditions relating to the child, the premises, the employer's involvement, and the availability of the scheme are all satisfied.

• No income tax arises on employer-provided childcare if conditions A to D are met; partial exemption applies where only part of the provision qualifies
• The child must be the employee's own or stepchild maintained at the employee's expense, resident with the employee, or a child for whom the employee has parental responsibility (Condition A)
• Care must be on premises not used mainly as a private dwelling, meeting applicable childcare registration requirements, and either provided solely by the scheme employer or under a qualifying partnership arrangement (Conditions B and C)
• The scheme must be open to the scheme employer's employees generally (or at a particular location), and the benefiting employee must work for the scheme employer or at the same location as employees who are eligible (Condition D)