Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps she is taking to encourage employers to adopt (a) tax-free childcare and (b) other workplace nursery schemes.

The workplace nursery scheme exemption allows employers to offer childcare support to employees without incurring income tax or National Insurance (NI) charges, provided certain conditions are met.

HMRC publishes online guidance on the use of workplace nursery schemes which is reviewed frequently and was last updated in August 2024.

In July 2024 HMRC published an article in its Agent Update as a reminder to businesses of the conditions to be met for the tax exemption to apply following increased awareness of a number of scheme operators advertising their service as having HMRC approval were the partnership requirements were not met.

The article can be found here: Issue 121 of Agent Update - GOV.UK (www.gov.uk)

Employer Supported Childcare schemes are voluntary arrangements. The Government supports these initiatives through relevant tax and NICs reliefs, but it is up to the employer to decide whether or not to offer childcare support to its employees.

The schemes primarily operate through salary sacrifice arrangements, as childcare is one of the few areas where salary sacrifice tax reliefs are still available.

Employers can choose to offer a workplace nursery scheme as part of their employee benefits package to attract and retain skilled employees.

With Tax-Free Childcare, eligible parents can simply open an online account and make payments directly to their childcare provider. For every £8 a parent deposits into their account, the government adds £2 to help with the cost of childcare.

As such, there is no requirement for employers to adopt the schemes.