Something that often takes new parents by surprise is the cost of childcare. The OECD data recently labeled the UK’s childcare system as the priciest among developed nations.
Alongside this, charity ‘Pregnant then Screwed’ revealed that a staggering 25% of parents allocate a hefty 75% of their income towards childcare expenses.
While there are provisions like 15 or 30 free hours of childcare available for certain age groups, these allocations are typically term-time only, translating to roughly 11 or 22 hours per week if used across the entire year. Additionally, the hours beyond the “free” ones often still put a significant strain on household budgets.
Exploring Tax-Free Childcare
Many parents have heard of the government’s Tax-Free Childcare program, which entails setting up an online childcare account for your child. Under this scheme, for every £8 contributed, the government adds £2 to be used for payments to the childcare provider. This option can provide some relief, allowing families to receive up to £500 every three months (up to £2,000 annually) per child, or up to £1,000 every three months if the child is disabled (up to £4,000 yearly).
However, if you’re looking for a way to make much bigger childcare savings then you need to take a look at the Workplace Nursery Benefit.
What is a Workplace Nursery Benefit?
A workplace nursery benefit is an offering by employers to support the childcare needs of their employees. This innovative solution involves partnering with commercial nurseries to establish a tax-exempt salary sacrifice scheme. While this concept originated in 1990, The Herde has transformed it into a modern solution adaptable to hybrid work environments, now easily accessible through our managed service. By leveraging salary sacrifice, employees can achieve remarkable tax and national insurance savings, ranging from 32% to 59%, while simultaneously allowing their workplaces to save on national insurance contributions.
How can I sign up to a workplace nursery?
Workplaces can establish partnerships with nursery providers to grant their employees access to substantial financial savings. The Herde streamlines this process by acting as a central partner, enabling employees to select the most suitable nursery for their needs. This approach accommodates hybrid and remote workers, eliminating the need for workplaces to establish multiple partnerships to cater to employees’ nursery choices.
If your workplace aren’t already a provider – submit a form here and we’ll provide you more information as to how they can get set up.
What kind of savings can I make using the workplace nursery?
It really depends on two things:
- How much you earn, and therefore how much tax you are paying
- How much your nursery fees are, and therefore how much you are looking to sacrifice.
We’ve got a handy calculator that you can use to help you get a rough idea of how much you can save here.
But below are a few examples to give you an idea of the kind of savings up for grabs!
By utilising the workplace nursery benefit, you’re able to tap into a comprehensive solution that not only eases financial strain but also creates a supportive framework for both employees and employers.
If you think your workplace would like to understand more about how they can support their parent workforce, make significant national insurance savings and demonstrate their commitment to a profitable and diver workforce, get in touch today!
Are you ready to be part of The Herde?