Most employers ask us a few questions about compliance, get clear answers, and are satisfied. Some employers have a legal or compliance team whose job is to ask a great deal more than that. This page is for them.
Bespoke Compliance Support for Larger Employers
How we help larger clients with more specific needs or concerns around HMRC compliance
Is the standard scheme enough for most employers?
Yes. For the majority of our clients, our stance on the HMRC requirements is more than adequate, we provide a clear and demonstrable set of measures to comfortably demonstrate the management requirement and funding requirement that is intrinsic to s318 of ITEPA 2003.
The legislation requires that the employer is 'at least partly responsible for financing the care and managing the provision of the care.' (ITEPA 2003 s.318, HMRC EIM22002) We meet that in ways that produce evidence as a normal part of running the scheme:
- The employer's representative agrees at the management meetings how the additional funding contribution is spent by the nursery. The nursery then provides receipts, invoices or other documentation to evidence that spending, which is uploaded to the portal and verified by our admin team.
- We schedule, attend, chair, record and minute every management meeting. The minutes are shared with all attendees and held in the online portal.
- The employer's funding contribution is contracted for the full term and remains payable even if the employee gives notice early, so the financial commitment is real rather than notional.
- All of the documentation showing the funding and management requirements being met is retained and available online.
Why would a larger employer want more than that?
But some clients are more risk-averse and for those who have legal compliance teams wanting additional support to feel comfortable that they are more than meeting the requirements, we can bespoke our solution to help them feel more comfortable.
A business with several thousand employees, an internal audit function and external auditors works to a different standard of assurance and requirements than more modest businesses. An off-the-peg solution may not satisfy a plc or a listed company who want further defined terms to provide the assurance that the scheme they offer to their staff can withstand HMRC scrutiny, and we will work with your compliance teams to provide that reassurance.
We can work with your legal or compliance teams to tailor our salary sacrifice nursery fee scheme so that you agree that it is aligned with your company's requirements and those of HMRC. This is a unique offering in the marketplace and something we have the agility and experience to offer.
Can the scheme paperwork be changed?
We have contract paperwork that governs how the scheme is run between the employer, the parent and the nursery. Those agreements set out who is responsible for what, how the funding contribution is set and paid, how the management meetings are convened and evidenced, and what happens if circumstances change.
For clients who want to make reasonable bespoke changes to the agreements, we can discuss proposals that, so long as they work to reinforce the requirements being met, we can accommodate. To be immediately clear, we will not water down our position on evidencing HMRC's requirements for a funding contribution and a management contribution. We 100% believe that the scheme should be run both to the principles but also to the legislative requirements that HMRC has set out.
Additional meetings
We will look at proposals for adjustments to the management meetings where they strengthen the management requirements of the scheme being met.
Additional financing
The option to deepen your commitment to the nursery is available to you. We have to be mindful of the needs of the nurseries you partner with.
How do larger employers connect their own systems?
That, combined with our APIs that allow larger companies to connect their HR and payroll directly into our systems to get up to the second data for all of their employees, our solution provides a unique option to provide the workplace nursery scheme as our salary sacrifice nursery fee scheme has been historically referred to.
For a large organisation, compliance and operations are the same conversation. Evidence that has to be gathered by hand from three different systems is evidence that will eventually be gathered late, incompletely, or by somebody who has since left. A direct connection between your HR and payroll platforms and ours keeps the participation data, the deduction data and the agreement data synchronised rather than reconciled after the event.
We also support external payroll providers accessing the salary deduction import file directly, and we offer SSO and MFA at no additional cost. There is more detail on our security standards in Technology, Security and Future Plans.
Does HMRC approve workplace nursery schemes?
No. HMRC does not approve workplace nursery schemes and has said so publicly. Any provider describing itself as "HMRC-approved" is claiming something that cannot be true.
What can be true is that a scheme is structured to meet the statutory conditions, run in a way that is consistent with that structure, and evidenced well enough that the position can be demonstrated if it is ever examined. The legislation has been in place since 2003, the partnership requirements unchanged for over 20 years. It simply indicates that when working in partnership with a commercial nursery, the employer must have a financial and management contribution to the partner nursery. That is what we ensure is contractually obligated by default but we understand that a legal team may want to work through the minutiae of the contract and make amendments to provide further comfort or contractual protection.
What about the recent HMRC guidance around the scheme?
HMRC provided an update in July 2024 which made clear that simply buying in places was not sufficient nor is simply providing a flat fee payment to the nursery. Our scheme does not operate that way, we meet and exceed the statutory conditions laid out in the HMRC legislation. We ensure the management meetings that are contractually obligated direct the additional funding provided by the employer and the meetings themselves all form part of that compliance piece. The funding element persists in the event of an early termination of an employee contract too, so the employer liability and commitment also provides further reinforcement to the commitment to the nursery by the employer. We operate to ensure that both the management contribution and financial contribution are fully evidenced throughout and ready to be demonstrated if ever challenged by HMRC. The guidance note also states 'HMRC believe the majority of workplace nursery partnership schemes satisfy the requirements' and we work hard to ensure we remain in that majority of workplace nursery partnership providers.
Who should get in touch?
Anyone with a more risk averse profile, if you want to take steps to review how you offer our workplace nursery scheme to your staff, then contact us to discuss what accommodations you require that allow you to offer our salary sacrifice nursery fee scheme to your staff in a way that you feel comfortable with.
We are happy to work directly with in-house counsel, compliance, internal audit or your external advisers.
Call us on 0800 888 6629 or contact us here with your requirements.
This article describes how Feel The Benefit structures and evidences the Workplace Nursery Scheme. It is not tax or legal advice. Employers should satisfy themselves, with their own advisers where appropriate, that any salary sacrifice arrangement is appropriate for their circumstances.