Minister for Finance statement on Tax Reliefs for Childcare services within communities

The Minister states:

The Department of Children, Disability and Equality has policy responsibility for improving access to high quality and affordable Early Learning and Care and School-Age Childcare. DCDE has recently established a Supply Management Unit, and a key part of that Unit's remit is to develop a planning function, for monitoring, analysing and forecasting of the supply and demand for early learning and childcare in a nuanced and specific way at local area level.

My colleague Minister Foley also continues to support the ongoing development and resourcing of "Core Funding", which has given rise to a significant expansion of early learning and childcare places since the scheme was first introduced. Core Funding, which is in its third programme year, funds services based on the number of places available, whether or not they are filled. The allocation model for the fourth programme year will be published in the coming weeks.

The Building Blocks Extension Grant Scheme will deliver additional capacity in the sector by supporting existing private or community early learning and childcare services to undertake physical extensions to existing premises, or for community services to purchase or construct new premises. Minister Foley recently announced €25 million in funding under the scheme to deliver 1,500 additional early learning and childcare places for 1 to 3 year-olds across the country. Forty-nine community and privately operated services have been shortlisted for funding, with places expected to begin to come on stream later this year.

With regard to the tax system, where a taxpayer carries on a trade consisting of the provision of childcare services, relief for the cost of capital expenditure incurred on plant and machinery, such as equipment, is provided in the form of capital allowances. I would note however that where a community childcare provider is a charity, the provider will not be subject to tax on their profits and the availability of capital allowances would not be a relevant issue.

To encourage employers to provide equipment for childcare facilities and fitness centres which are for the exclusive use of their employees, the Accelerated Capital Allowances (ACA) Scheme for Childcare Services and Fitness Centres is available. This scheme provides for 100% capital allowances in the first year in respect of expenditure incurred on qualifying equipment, and for an accelerated Industrial Buildings Annual Allowance on qualifying expenditure of 15% per annum for 6 years and 10% in year 7. The rationale for introducing this relief was to help tackle the cost and availability of childcare facilities, both of which had been cited as barriers to work.

Finally, I would also note that, subject to certain criteria, income of up to €15,000 per year may be exempt from Income tax and USC to individuals who provide childminding services in their own homes.

The Programme for Government recognises that early childhood is a time of great opportunity to shape a child's development and build a secure foundation for their future, and contains a range of commitments to build an affordable, accessible and high-quality early childhood education and care system.