Nursery and Pre-School Provision

Many academies offer nursery, pre-school or crèche provision from their setting.  The pre-school may help to provide an easier introduction to the school for local children in catchment, but it may also be provided to assist members of staff with young children.

The costs of the pre-school are often wholly or partly grant-funded, with parents paying for additional hours and for certain costs not covered by the state-funded “free hours”.  Working parents with children over the age of three can typically benefit from 30 hours per week of state funding.  Younger children, aged between nine months and two years old, may also qualify for 15 hours of funded childcare.

Although not entirely clear from the HMRC guidance, it appears that the state funded element should be considered a non-business activity, while the paid element will be a business activity. The income and expenditure can be allocated to business and non-business in proportion to the funding rather than being treated as wholly business or non-business, even if one part forms the greater percentage of the overall provision.

VAT Treatment