Budget: Small nurseries taken out of business rates

Laura Marcus
Thursday, March 17, 2016

Measure in yesterday's Budget set to affect the early years sector include a cut to business rates, a sugar levy and an extension to childcare vouchers.

Small private nurseries stand to benefit from a reduction in taxing trade properties, announced in yesterday’s Budget.

The Business Rates tax on business properties will now only apply to businesses renting properties with rateable values over £15,000.

This is a significant rise from the current £6,000 threshold, so will offer many nursery owners a new tax break.

Local authorities will lose revenue as they collect the levy, similarly to council tax.

Courtney Donaldson, head of childcare at specialist business property adviser Christie & Co, said, ‘We welcome the Chancellor’s announcement in relation to the proposed changes to Business Rates and that the small business rates relief threshold will rise from £6,000 to £15,000.

‘The announcement means that for day nursery owners, those that trade from properties with rateable values of less than £15,000 will receive 100 per cent relief, which means that nursery managers of such settings will not be required to pay business rates.’


The sugar tax on soft drinks

Anti-obesity campaigners welcomed the Budget announcement that a sugar levy on soft drinks will start in 2018.

The new tax is expected to raise £520m which will be redirected to school sport, new activities, and breakfast and after-school clubs. More specifically it should:

  • double the primary school PE and sport premium from £160 million per year to £320 million per year
  • provide up to £285 million a year to give 25 per cent of secondary schools increased opportunity to extend their school day
  • provide £10 million funding a year to expand breakfast clubs offering nutritious food

Imelda Redmond, chief executive of 4Children, said, ‘New funding for breakfast clubs and extra-curricular activities for secondary schools, raised by the sugar levy, will be well received by thousands of families who struggle to find suitable out-of-school childcare for their children. Given that low income parents are more likely to struggle, this funding should be directed at schools in the most disadvantaged areas so that families with the greatest need benefit first.’

However, the Children’s Food Trust highlighted the urgent need for further ‘game-changing’ actions to be revealed in the government’s delayed Childhood Obesity Strategy. 

CEO of the charity, Linda Cregan, said, ‘Sugary soft drinks are a big source of sugar in children's diet, particularly as they get older, and don't give children any nutritional value. So we welcome every step to encourage us all to buy sugary soft drinks less often, and to keep manufacturers focused on reformulation of their products. But we have to remember that this tax isn't a silver bullet – it's just one tool to help in the fight to get children eating and drinking more healthily, and we look forward to the full set of 'game-changing' actions government has promised to deliver in the forthcoming childhood obesity strategy.’

Childcare vouchers extension

The use of childcare vouchers has been extended to run alongside the incoming Tax-free Childcare scheme indefinitely, it was also announced.

The Childcare Voucher Providers Association (CVPA) welcomed the fact that parents will be able to compare schemes and choose what best suits their family. 

The new extension means that childcare vouchers will be open to new entrants until April 2018, and, from that date, existing users of childcare vouchers can continue to to claim vouchers as long as they remain with their employer.

The new Tax-free Childcare Scheme will roll out from early 2017 and parents can switch to this at any point.

The Chair of the CVPA, Fiona Shields, said, ‘Keeping childcare vouchers open to new entrants while Tax-free Childcare is being rolled out will allow parents to compare the schemes and choose whichever is best for their family. Some families will not be eligible to claim Tax-free Childcare, while others will be better off under childcare vouchers rather than Tax-free Childcare.’

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