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Workbased Nursery

On site childcare facilities provided by an employer are usually offered to employees through a tax efficient “salary sacrifice scheme”.

Salary Sacrifice Scheme

A workplace nursery salary sacrifice scheme will comply with HM Revenue and Customs regulations as long as:

  • The premises are provided by the employer
  • The facilities comply with Ofsted registration
  • Childcare places in the nursery are available to all employees

What are the Benefits to Employers

  • The employer saves on employers NI contributions
  • It is a very powerful staff recruitment and retention tool
  • The employer is able to offer a substantial childcare benefits package
  • The employer is able to provide flexible childcare around shift patterns
  • Rental Income from Kids Academy.

What are the Benefits to Employees

  • Provides a tax free incentive to the employee as the full cost of childcare is exempt from income tax and NI
  • Tax free savings of 31% for standard tax rate payers
  • Tax free savings of 41% for higher tax rate payers
  • It is extremely convenient for staff

How does the Salary Sacrifice Scheme work?

Workplace nurseries operate under the HMRC compliant salary sacrifice scheme whereby the employee agrees to reduce their contractual gross salary by the equivalent cost of the nursery childcare fees and the employer pays Kids Academy directly.

The main advantage of salary sacrifice is that the full extent of nursery fees can be sacrificed and therefore employees can obtain the tax free benefit on the full cost of the childcare.

Financial Benefits

Childcare provided at workplace nurseries using a salary sacrifice scheme is fully exempt from income tax and national insurance contributions which can save employees up to 31% of their childcare fees for standard tax rate payers and up to 41% for higher rate tax payers with the advantage of saving the employer significant amounts in employer NI contributions.

Low Rate Tax Payer Savings Childcare Payment Methods
Per annum Full childcare Cost Childcare Voucher Salary sacrifice
Annual Salary £28,000.00 £28,000.00 £28,000.00
Childcare Fees (£150per week) £7,800.00 £6,896.00 £5,382.00
Saving Per annum £0.00 £904.00 £2,418.00
0% 12% 31%
 
High Rate Tax Payer Savings Childcare Payment Methods
Per annum Full childcare Cost Childcare Voucher Childcare Voucher
Annual Salary £45,000.00 £45,000.00 £45,000.00
Childcare Fees (£150per week) £7,800.00 £6,604.00 £3,198.00
Saving Per annum £0.00 £904.00 £1,196.00
0% 15% 41%
 
Employer NI Savings Childcare Payment Methods
Per annum Full childcare Cost Childcare Voucher Salary sacrifice
NI Contribution Saving £0.00 £26,127.00 £69,888.00

Based on 70 place nursery assuming a cost of £150 per week for childcare

These examples are based on basic tax rates for the year 2010/11. Calculations are for illustration purposes only. Please be aware that the level of financial benefit may be affected by your personal circumstances such as different tax codes, pension arrangements and entitlement to benefits in tax credits

Choose a Kids Academy Workplace Nursery

In choosing Kids Academy childcare to provide your workplace nursery we are able to offer our knowledge and experience in dealing with HMRC compliance and Ofsted regulatory approval to step you through the process of setting up your workplace nursery.

We are available to discuss your individual requirements from design and build, suitability of land and sites or even a local workplace nursery partnership scheme with block booking of nursery places at discounted rates.

With Kids Academy multi award winning childcare we will provide outstanding day nursery and preschool education for children aged 4 weeks to 5 years.

We will be here to support you and wish you well as you embark on your journey to provide your staffs children with the most important gift a parent can give a child….an education.

For any further information please contact us on 01925 732 600 or
email dave@kids-academy.co.uk.