Is your business running a workplace nursery scheme? Key steps to remain tax compliant

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HM Revenue & Customs (HMRC) has recently issued a warning to employers regarding the proper use of workplace nursery schemes.

Business owners must have a thorough understanding of the rules surrounding workplace nursery schemes to remain compliant and avoid running the risk of any tax penalties.

Understanding nursery schemes

Nursery schemes, also known as workplace nursery schemes, are designed to help working parents with the cost of childcare.

These schemes allow employers to provide childcare facilities either directly or through a third-party provider.

In return, employees receive tax and National Insurance (NI) exemptions on the cost of childcare, making it an attractive benefit for both employers and employees.

HMRC’s warning

HMRC has recently issued a warning to businesses regarding the misuse of nursery schemes.

Businesses must understand that any attempt to use these schemes to reduce tax payments improperly will be met with substantial penalties.

Key compliance requirements

To ensure your business remains compliant with HMRC’s regulations, there are several key points to consider:

Your records should reflect the eligibility of each participating employee to avoid any issues if HMRC investigates.

The consequences of non-compliance

Non-compliance with HMRC’s regulations can result in severe consequences for your business, including:

If you have any concerns or need assistance with ensuring your nursery scheme meets HMRC’s requirements, our team of experienced accountants is here to help. Contact us today.