The issue of affordability is a perennial news item when it comes to childcare and today’s workforce. In 2014, more babies were born to mothers over 35 than those under 25 – with many balancing the pressures of building a career and their finances with a new family.
With more than 30 years’ experience in workplace nurseries, we’ve supported many employers during their discussions who are beginning to explore the long-established tax and national insurance exemption for workplace nurseries – also known as Workplace Nursery Exemption.
Workplace Nursery Exemption is a statutory exemption which has been designed for organisations offering childcare facilities. The exemption allows an employer and an employee to save tax and National Insurance contributions through childcare fees paid at a workplace nursery.
The savings are offered to employees through a salary sacrifice scheme, in which the employee agrees to pay for their childcare directly from their gross salary.
As the nursery fees are taken directly from the employees’ gross salaries, an employer does not pay any Employer’s National Insurance (NI) contributions on the proportion of salary sacrificed by the employee, and the employee also saves on their tax and NI contributions.
For example, an employee paying £10,000 per year for their nursery fees might expect to save up to £4,200 in tax and NI contributions – depending on their personal tax arrangements.
We would always recommend an employer seeks professional tax advice, and we would be pleased to help employers to access specific information on the exemption process. A great place to start is the Government’s website: https://www.gov.uk/expenses-and-benefits-childcare/whats-exempt.
We would also be delighted to invite you to speak to some of our clients who already administer the savings through a salary sacrifice scheme.
To provide further information on the financial benefits of a workplace nursery and the exemption available, we will be shortly launching our Workplace Nursery Exemption Toolkit – specifically created to support organisations in gaining Workplace Nursery status. The toolkit provides information on the exemption and detailed examples of the benefits available to both employers and employees, in addition to a variety of templates to support you in implementing the scheme in your organisation.
Please email firstname.lastname@example.org to receive a copy as soon as it becomes available.
You can also download our Employers’ Guide to Childcare here, which includes lots of information and guidance on the best childcare solutions for your business and your employees.