Earning over £72,500?
Congratulations! You're in the Top 10% of UK Taxpayers.
Does tax have to be so taxing?
If you are earning over £72,500, you are in the top 10% of taxpayers in the UK and, according to The Times, that group contributes 60% of the Income Tax received by HMRC.
As the cost of living escalates, a salary like this feels less enviable and more typical for employees working up the career ladder and this salary needs to cover higher costs than ever before!
What far fewer people realise is that a scheme exists for nursery fees, just like Cycle to Work, or the Salary Sacrifice Pension, which pays out for the benefit before tax. That's right, there is an uncapped Salary Sacrifice Nursery Fee Scheme that allows UK taxpayers to save tax on all of their nursery fees, the same as saving on a bike, but making that tax saving every two weeks!
On a salary of £72,500 in 2026/27, take-home pay is £52,611 a year. The other £19,889 has already gone to HMRC through Income Tax and National Insurance.
Then, out of that take-home pay, most people are paying their nursery fees.
Please say you are paying your nursery fees before tax!
This is what we at Feel The Benefit can change for you! Our Salary Sacrifice Nursery Fee Scheme moves those fees above the tax calculation. Your nursery fees come out of gross salary before Income Tax and National Insurance are applied. Your same nursery still gets paid, but your tax bill falls. Use our calculator to see the tax magic happen.
If nursery fees are being paid from take-home pay, more tax is being paid than necessary!
Up to 56.3% can be saved!
For a higher-rate taxpayer, the saving on nursery fees through salary sacrifice is already significant. But for incomes between £100,000 and £125,140, it increases further.
The Personal Allowance tapers away at a rate of £1 for every £2 earned over £100,000. The effect is an effective tax rate of 60% on earnings in that band.
The Workplace Nursery Scheme has no income ceiling. For parents in this band, the saving can reach 56.3% of total nursery fees.
For a specific worked example, a parent on £125,000 paying £2,400 a month in nursery fees saves £14,590 a year. The full breakdown is here.
More than 250,000 people engaged with this on LinkedIn
The comments drew in parents, accountants, and tax professionals, many of them making the connection between their tax position and their nursery fees more clearly for the first time.
The scheme itself is not new. It has been in legislation since 2003 under ITEPA 2003, section 318. It is an established provision for employers to help employees pay for nursery fees more efficiently.
More of your salary can return to your pocket instead of being paid in tax.
You no longer have to pay nursery fees from income that has already been reduced by Income Tax and National Insurance.
Our Salary Sacrifice Nursery Fee Scheme ensures your nursery fees are paid out of gross salary. The same nursery fees for the same nursery can look a lot more bearable in your family's finances when they haven't been paid after tax.
If you want us to approach your employer and explain how it works, register your interest here and we will use the details you supply to contact them.
There is no charge to the employer. Our fees come from the parent's savings, as shown in our savings calculator.
How you can take advantage
Taxed once already
Then nursery fees come out of what is left
No income ceiling
The scheme works better the more you pay in tax
You can trigger it
The employer has to offer it
Your employer has to offer it
Most employers do not offer the scheme. For some it is because it has been known by the name Workplace Nursery, which sounds as though the company would need to run an actual nursery or creche on-site. They do not. This is not an on-site nursery. You will not need to fit a baby-gate beside your desk!
There are requirements of the HMRC legislation, as we have laid out clearly in our FAQs, and it is our job to work with you, your employer and your nursery to make sure that these fundamental elements are fully understood, accepted and undertaken fully and correctly.
Employers typically do not know this scheme exists. Some remember the Childcare Voucher Scheme which closed to new applicants in 2018, and think there are no options. Others are aware of Tax Free Childcare (TFC) which you can compare with here: Tax Free Childcare (TFC) Comparison Tool TFC has salary limits, both parents must be working, and other criteria including the need to re-apply every 3 months, and is capped at £2k of savings.
If your employer does not currently offer the scheme, let them know that you and they are missing out because of their lack of awareness of our scheme. We do not charge a set up fee or any ongoing fees, it is free to them! Register your interest and we will speak to your company directly.
Your salary. Your nursery fees. Your saving.
Every family's position is different. The saving depends on salary, nursery fees, and where income sits in relation to the tax thresholds.
The calculator shows the breakdown for employees and employers in a couple of minutes.
Interested in the scheme?
Enter your work email and we will send you a verification link, then approach your employer to explain how the Workplace Nursery Scheme works in practice.
Got a Question?
Call us on 0800 888 6629 or
email info@feelthebenefit.co.uk