Find out more about the workplace nursery salary sacrifice scheme
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The workplace nursery salary sacrifice scheme enables you to salary sacrifice the cost of your nursery fees. Enabling you to pay your fees monthly, directly from your salary before tax, via your workplace. Therefore, reducing the tax and national insurance contributions made.
Any employee who has “parental responsibility” that meets the below criteria.
- resident with the employee or
- a child of the employee (including a stepchild) and maintained at the expense of the employee.
You can sacrifice your full nursery fees, as long as the salary reduction does not take your gross salary below the National minimum wage.
Yes! The Herde will work with your workplace and nursery to set up an agreement. However, the scheme is only eligible for Ofsted registered nurseries who meet financial stability requirements. Fees for childminders or in home nannies are not eligible for the scheme.
Unfortunately not, you are only able to benefit from either the government tax free childcare or workplace nursery scheme. Use our calculator to assess which scheme can provide the best savings for your circumstances.
You are encouraged to look at your annual childcare costs and divide this by 12 to calculate an accurate salary sacrifice amount. This amount will need to be agreed with your nursery when you enroll onto the scheme, and be a consistent amount each month. This can only be amended in the case of a significant lifestyle event.
Any nursery provision provided above what is agreed through the scheme should be discussed with your nursery and paid for directly by you to your nursery.
What is a ‘significant lifestyle event?’ A significant lifestyle event can align to any of the below requirements;
- Marriage or civil partnership
- Notification of pregnancy
- Commencement of or return from maternity leave
- Divorce or separation
- Death of a partner or dependent
- Commencement of or return from long-term sick leave
- Half/nil pay due to sickness absence (wherein your salary falls below the National
- Minimum Wage)
- Redundancy of a partner
- Career Break
- Academic Leave of Absence
- Your child becomes eligible for the educational grant
- Your child attends part time educational nursery elsewhere
- A significant change in working hours (20% or more)
- Moving house
- Leaving the employer
Once you are signed up to the scheme you are required to give three months’ notice ahead of one of the above lifestyle events in order for your membership to be terminated.
You must commit to a twelve-month membership unless you experience an eligible ‘significant lifestyle event’*, enrolment will open during your organisation’s benefits enrolment window each year. You must remain with an employer who is part of The Herde to continue to receive the salary sacrifice benefit.
You will only be able to leave the scheme when your child leaves nursery, during the benefit enrolment window or you experience a ‘significant lifestyle event. You are required to give three months’ notice to terminate your membership.
Nursery fees will be paid in advance of the childcare provision; therefore, you will pay for your next month’s nursery provision at the end of the previous month. For example, September’s nursery fees will be paid from your August salary.
Once you have agreed the amount of your salary you wish to sacrifice, your workplace will send a new contract of employment agreement. Depending on which pension schemes your workplace is aligned to, you may not see an impact on individual pension contributions. In some instances, staff will pay pensions contributions based on the salary before sacrifice – known as the reference salary.
We encourage workplaces to continue to pay relevant pension contributions based on the reference salary, but this is dependent on each workplace and their preferences.
Any statutory or contractual pay staff may be eligible for during maternity leave will be calculated on the gross (post sacrifice) salary amount. You may, however, choose to opt out of the scheme for the duration of your maternity leave, this would be an acceptable ‘significant lifestyle event’ and therefore would not be subject to twelve months’membership in the Scheme.
By reducing your basic salary, you may lose or reduce your entitlement to certain statutory payments funded by the Government. This is because entitlements to any statutory benefits (and in some instances, the amount paid) are worked out on the basic salary – that is the salary after the sacrifice. We encourage you to speak with an independent financial advisor should you have any concerns regarding the above.
You will need to calculate your nursery fees, minus the early years funding to calculate your salary sacrifice amount. You are able to access both Early Years funding and be part of The Herde workplace nursery salary sacrifice scheme. To find out if you are eligible for the early years funding use the government website here.
You must liaise directly with your nursery for any early year’s funding.
Workplace not yet registered with The Herde?
Complete the form below for us to contact your workplace or download our information pack to hare with your HR team.