SE21925 - Benefits: exemption for workplace nurseries – responsibility for financing

Section 155A(5) ICTA 1988

The “responsibility for finance” test for jointly run workplace nurseries (see SE21920) requires significantly more than merely buying-in places from a commercial nursery whether on an ad hoc or a more structured basis. There must be some real and substantial commitment to funding the facility or providing it with capital.

Such a commitment may take the form of an agreement to meet a set proportion of the overall cost of providing the care or it may be a guarantee to indemnify against losses a primary care provider who would otherwise be at real risk of losses.

In the case of a facility which was newly established or of doubtful financial viability the commitment may take the form of a long term undertaking to pay a fixed periodical contribution (possibly expressed as the price of a given number of places) where that contribution is calculated to ensure overall financial viability.

Arrangements in which the employer’s participation in financing is little more than a token gesture, purporting to meet the statutory test but without real responsibility falling on the employer, do not meet the statutory test.

• Remember that the exemption does not apply at all if the employee is chargeable under Section 19(1)1 ICTA 1988 because the childcare has been paid for out of their emoluments or the childcare represents an application of the employees emoluments (seeSE21900).