How a workplace nursery benefit saves you money
A workplace nursery benefit lets you pay nursery fees from your pre-tax income instead of your take-home pay. Because the payment is made before income tax and National Insurance are deducted, you keep more of what you earn. This is available to any UK employee whose employer offers a workplace nursery scheme.
The saving is protected by Section 318 of ITEPA 2003, which exempts qualifying workplace nursery provision from tax entirely. Unlike the old childcare voucher scheme (closed to new applicants in 2018), there is no monthly cap on the benefit — it covers the full cost of your nursery fees.
Halo Pay makes it simple for your employer to offer this benefit at zero cost to the business. The employer National Insurance saving more than covers the cost of running the scheme. Use the calculator above to see your personal saving based on your income and nursery fees.
Frequently asked questions
How does paying nursery fees pre-tax work?
With a workplace nursery benefit, your employer deducts your nursery fees from your gross pay — before income tax and National Insurance are calculated. Because the payment happens pre-tax, you keep more of what you earn. It is completely legal under Section 318 of ITEPA 2003 and applies to any Ofsted-registered nursery in the UK.
How much can I save on nursery fees?
Most parents save between £200 and £500 per month depending on their salary, tax band, and nursery fees. A basic-rate taxpayer paying £1,200/month in nursery fees typically saves around £250/month (£3,000/year). Higher-rate taxpayers save even more. Use the calculator above to see your exact figure.
Does my employer need to do anything?
Your employer needs to set up a workplace nursery benefit scheme. With Halo, that takes about five minutes and costs them nothing — the benefit is entirely self-funding through the employer National Insurance savings. There are no contracts, no fees, and no ongoing admin.
Which nurseries are eligible?
Any nursery registered with Ofsted (or the equivalent regulator in Scotland, Wales, or Northern Ireland) is eligible for a workplace nursery benefit scheme. Your child does not need to change nursery. The nursery does not need to sign up to anything — your employer pays them directly, just as you do now.
Is this the same as childcare vouchers?
No. Childcare vouchers closed to new applicants in October 2018. The workplace nursery exemption under Section 318 ITEPA 2003 is a separate and uncapped benefit — there is no £243/month limit like vouchers had. It covers the full cost of nursery fees, with no upper cap on the tax saving.
How does a workplace nursery benefit work?
Your employer partners with your nursery through a scheme like Halo Pay. Each month, your nursery fees are deducted from your gross pay before tax. Your employer then pays the nursery directly. You see the saving immediately on your payslip — lower gross pay, but higher take-home pay because you are paying less income tax and National Insurance.