Employer FAQs

A Workplace Nursery Scheme allows an employer to help employees with the cost of nursery childcare by providing nursery places through Salary Sacrifice. Where structured and operated correctly, the full cost of the childcare can be exempt from Income Tax and National Insurance. To see what kind of savings your business can make, click here and find out in just 2 clicks.

Unlike voucher-style arrangements, there is no weekly or monthly cap on the value of the childcare or the savings that can be made

The legislation requires more than simply buying nursery places, the employer must be 'at least partly responsible for financing the care and managing the provision of the care.' (ITEPA 2003)

Feel The Benefit structures this involvement in a practical and proportionate way, ensuring the employer's role is meaningful without being day-to-day management of the nursery. This managerial responsibility is delegated to the employee (the parent) whose child is attending the nursery.

Employer involvement is limited but deliberate. It includes:

• Committing to a fixed monthly financial contribution for the agreed contract term (ITEPA 2003)
• Participating (through their employee who has a child at the nursery and acts as the company's agent) in a small number of structured meetings that focus on:
  • How management of the nursery operates
  • Staffing levels and staff training
  • How employer-provided funding is used
  • Any other material matters

Employers are not expected to manage staff and are absolutely not involved in day-to-day running of the nursery but will act as a support, and provide at least partial management and be a meaningful financial contributor to the nursery.

The management meetings form part of the evidence that the employer is genuinely involved in the scheme. If they do not take place or are not conducted properly, the Income Tax and National Insurance savings obtained through the scheme would be due to HMRC.

Feel The Benefit actively schedules, facilitates, and records meetings to ensure and be able to demonstrate the meetings have taken place, and have materially contributed to the finances and management of the nursery.

The primary risk arises if the scheme is not operated as laid out in the ITEPA legislation, the clearest element being that the employer be 'at least partly responsible for financing the care and managing the provision of the care' (ITEPA 2003), which is why Feel The Benefit provides structure, documentation, and oversight throughout.

We work with you, the parent (your employee) and the nursery to ensure that we all can absolutely prove that the HMRC ITEPA legislation is fully adhered to in a meaningful and honest way.

The employer commits to a fixed monthly contribution to the nursery, a minimum of £100 per participating employee per month.

In the majority of cases this cost is more than offset by employer National Insurance savings arising from salary adjustments, making the scheme cost-neutral or more typically, a significant net cost saving to the employer.

The employer's financial exposure is known and capped through the agreed monthly contribution and contract length. There is no open-ended liability.

Feel The Benefit manages the setup process end to end. This includes documentation, employee onboarding, nursery engagement, and payroll coordination.

From the employer's perspective, setup is typically limited to approving participation and implementing agreed payroll adjustments. Employees can apply online through our website for which we provide secure access.

Feel The Benefit supports multiple payroll approaches, including salary sacrifice, salary addition, or net pay arrangements.

Employers must ensure that no employee's pay falls below National Minimum or Living Wage thresholds. Where salary sacrifice is not appropriate, alternative structures can be used so the scheme remains open to all eligible employees.

The majority of these workplace nursery places are paid for through salary sacrifice which works in the same way as other salary sacrifice schemes in terms of deductions being applied before Income Tax and National Insurance is deducted.

While the scheme supports parents of nursery-age children, its impact is often wider. Childcare costs are a significant driver of workforce attrition, particularly among parents who may otherwise leave employment to offset the costs of childcare.

Retaining experienced staff reduces recruitment costs and disruption across teams. It is statistically 7 times more likely that the female parent who will give up work to provide childcare, as the gender pay gap would typically dictate this is the most financially prudent move, and so this benefit helps retain female talent in the workplace.

The scheme typically frees up around 33% of a nursery fee back into an employee's household budget. This can make the difference between remaining in work and leaving employment, particularly for parents facing high childcare costs.

Employers often see this as both a financial and social investment. Use our employer savings calculator or employee savings calculator to see the numbers.

No. The scheme is open to all eligible parents. While childcare costs disproportionately affect women due to existing pay gaps and caring patterns, the benefit is equally available to fathers and other eligible caregivers.

Tax-Free Childcare is a government scheme with capped support. A Workplace Nursery Scheme can deliver greater savings for many families, particularly where nursery fees are high.

Employees should consider their own circumstances, and Feel The Benefit provides tools to help illustrate potential differences. Employer savings can be calculated using our employer savings calculator. Employee savings can be calculated here.

Feel The Benefit acts as the scheme agent. This includes:

• Structuring the arrangements
• Coordinating employers and nurseries
• Facilitating, directing and recording the required meetings
• Maintaining records
• Taking and making all payments
• Providing a secure online portal for documentation and transparency

The scheme is particularly well suited to employers with one or more employees using nursery childcare and a desire to retain skilled staff.

Feel The Benefit works with employers to determine whether the scheme is appropriate based on workforce profile and objectives.

Yes, by playing a part in helping manage and financially support one or more nurseries helps invigorate local businesses, allowing them to potentially finance more free childcare places and more free childcare hours to the benefit of the wider community.

You are genuinely helping finance nurseries, who, according to polling by the EY Alliance, 10% of which are at risk of closure in the next 2 years due to under-funding and more than a quarter pausing hiring due to financial pressure.