Glossary · UK
What is Workplace Nursery Scheme?
A tax and National Insurance free childcare benefit where an employer provides or part-funds a workplace nursery, unlike Tax-Free Childcare or Childcare Vouchers which are capped.
Full Definition
A workplace nursery scheme is a childcare benefit in which an employer either runs its own on-site or nearby nursery, or contracts with (and part-owns or part-funds) a commercial nursery, so employees can place their children there. Provided the qualifying conditions in the relevant tax legislation are met -- broadly that the employer is "wholly or partly responsible for financing and managing" the nursery, rather than simply paying a third-party nursery bill on the employee's behalf -- the benefit is entirely exempt from Income Tax and National Insurance, with no cap on the value. This makes it significantly more generous than Tax-Free Childcare (capped at GBP 2,000 of government top-up per child per year) or the older, now-closed-to-new-joiners Childcare Voucher scheme (capped at GBP 55 a week of salary-sacrificed pay for a basic-rate taxpayer). Because the exemption requires genuine employer involvement in running the nursery rather than a straightforward payment arrangement, workplace nursery schemes are mostly offered by larger employers, universities, hospitals and public sector bodies with the scale to set one up, and employees should check with their employer whether an arrangement genuinely qualifies before assuming it is tax-free.