EIM22015 - Benefits: exemptions: childcare and childcare vouchers: rules from 6 April 2005: conditions: availability to all employees

Section 318(8) and 318A(5) ITEPA 2003

From 6 April 2005 the exemptions from income tax and NIC only apply to benefits provided under a scheme if the childcare arrangements are open to:

• all employees generally or
• generally to all employees at a particular location

In the case of workplace nurseries (Section 318(8)) and other childcare (Section 318A(5)) the facility should be generally available to:

• all employees of the employer who is operating the scheme or
• all employees on the site where the nursery is located.

Nurseries may also be available to other workers on the site such as contractors or employees of other employers who are based at the premises.

The condition is intended to encourage employers to provide childcare for all employees. If the scheme is only available to a particular group of employees – for example, directors or senior managers – this condition will not be met and the value of the benefit will remain liable to income tax and NICs.

Employers may operate on a number of sites but have a workplace nursery at only one of them. If the nursery is available to all employees working at the site where it is located the condition will be satisfied. There is no requirement to provide workplace nurseries at every site.

The rule does not require the employer to provide unlimited nursery places. Places available in workplace nurseries may be limited but an employer’s scheme will not fail to attract exemption simply because there is a waiting list and some employees cannot be catered for at any given time. However, in these circumstances the criteria for awarding places should not be biased in favour of particular groups of employees – see above.