Frequently Ask Questions
To participate in the scheme, the following criteria must apply:
- You must be a PAYE taxpayer earning enough so that your salary does not drop below the minimum wage due to the salary sacrifice.
- Your nursery fees must be at least £650 per month.
- Your child should be at the nursery for at least another 12 months.
- Your employer must offer the benefit to all employees.
- Your nursery must be OFSTED registered and not in a private dwelling.
To continue using the benefit, you must receive sufficient income so that the salary does not fall below the minimum wage due to the salary sacrifice. If your pay falls below the minimum wage, the benefit will need to be paused until you return from leave.
Yes, employers can partner with multiple nurseries.
A salary sacrifice arrangement is an agreement to reduce an employee’s cash pay in return for a non-cash benefit. In this case, employers pay nursery fees out of the employee’s gross salary, resulting in savings on income tax and National Insurance contributions for both the employee and employer.
Yes, you can use the benefit alongside the 15–30 free hours if your nursery offers this. However, it cannot be used with tax-free childcare for nursery fees. The workplace nursery scheme can provide higher savings, up to 41% and uncapped, compared to the maximum £2000 a year savings with tax-free childcare.
We work with many OFSTED-registered nurseries across the UK. If we don’t currently partner with your nursery, we will contact them to explain the benefit and establish a relationship
Yes, the minimum nursery fee is £7800 per year or £650 per month.
The workplace nursery scheme has existed since the late 1980s but is poorly publicised. Other tax-free childcare schemes, such as the government-run programme or the 15/30 hours entitlement for 3–4-year-olds, are more well-known.
This government scheme allows parents to pay nursery fees from their pre-tax salary through a partnership between employers and nurseries. This results in savings on income tax and National Insurance, giving parents a saving of up to 41% on their nursery fees. Use our savings calculator for more information.
The setup time depends on how quickly your employer and nursery sign the contracts. We begin working on your application within 48 hours of receipt.
The contract term is a minimum of 12 months. After this period, the contract continues on a monthly rolling basis. Your child must have at least 12 months remaining at the nursery.
We charge a 12% management fee on the nursery fee, which is added to the salary sacrifice. The net cost to parents is reduced based on their tax bracket: 6.4% for additional rate taxpayers, 7% for higher rate taxpayers, and 8.2% for basic rate taxpayers.
For more details, refer to HMRC’s guidance on Employer Supported Childcare (480: Appendix 11) and Benefits: Exemptions: Workplace nursery provision from 6 April 2005 Section 318 ITEPA 2003.
This depends on your employer. Nurseries receive a minimum of £100 per month from your employer. We recommend employers contribute the entirety of the employer National Insurance saving (13.8%) resulting from an employee’s salary sacrifice.
Your employer will need to continue paying the monthly financial contribution to the nursery, regardless of whether you remain employed or your child stays at the nursery.
Yes, you can. At the start of the contract, the nursery confirms your fee schedule. If there are changes, provided you notify us before we invoice your employer, we can adjust the invoice accordingly.
We charge employees a small fee based on their nursery fees, currently set at 12%. This fee is taken from the gross salary, so the net percentage paid by parents is between 6% and 8%, depending on their tax bracket.
