How Nurseries Gain From Workplace Nursery Salary Sacrifice Partnerships
The workplace nursery salary sacrifice scheme is typically discussed from the parent's or employer's perspective, since they are the ones who initiate the arrangement and benefit from the tax savings. However, nurseries are an equally important part of the scheme, and the benefits they receive from participating are real and meaningful.
The Nursery's Core Role in the Scheme
For the workplace nursery salary sacrifice scheme to work, HMRC requires that the employer formally finances and manages the nursery setting. This means the nursery is not just receiving redirected salary payments. It is entering into a genuine partnership with the employer, one that comes with a formal contract, a monthly financial contribution, and an ongoing relationship.
This distinction matters for nurseries because it means the scheme is not just administrative. It is a genuine partnership that brings the nursery additional resources and a stronger relationship with the local business community.
The Financial Contribution Nurseries Receive
Under the scheme, employers contribute a minimum of £150 per month to the nursery per employee using the arrangement. This contribution can be higher, particularly if the employer's NI saving from the salary sacrifice exceeds the minimum. From April 2025, with employer NI at 15%, a single employee sacrificing £1,000 per month generates a £150 employer NI saving, meaning the minimum contribution can often be covered directly from that saving.
For nurseries with multiple employees from the same employer enrolled in the scheme, the aggregate contribution can be very meaningful. This additional and predictable income supports nursery operations and can contribute to improving staffing, facilities, and provision quality.
Additional Income Beyond Regular Fees
Nursery fees themselves are the main source of income for most childcare settings, but they are also subject to significant variability. Children leave, fee levels are negotiated, and funded hours entitlements affect total income. The employer contribution through the workplace nursery salary sacrifice scheme represents income that is separate from and in addition to the regular nursery fees paid by parents.
This additional stream of income, provided it is reliably maintained through the formal contract, can help nurseries plan more confidently for the future and invest in improvements that benefit all children in their care.
The Contract Term Creates Certainty
One of the practical benefits for nurseries is the minimum 12 month contract term. This means that once the employer and nursery sign the partnership contract, the employer is committed to maintaining the financial contribution for at least a year, regardless of changes in the employee's circumstances. Even if the employee leaves their job or moves their child elsewhere, the employer's financial obligation to the nursery continues until the end of the minimum term.
This certainty is valuable for nursery planning and budgeting, making the scheme more attractive as a stable source of income rather than a variable one.
Reaching Nurseries That Are Not Yet Aware
Many nurseries have not yet heard of the salary sacrifice nursery fees scheme. When a parent registers and their nursery is not yet familiar with the arrangement, specialist teams reach out to the nursery management directly to explain the benefit and facilitate the partnership.
This proactive outreach means that nurseries do not need to actively seek out the scheme. Instead, they are introduced to it through the parents who want to access it. Most nurseries, once they understand the financial contribution involved and the minimal administrative burden on their end, are receptive to participating.
Working With Multiple Employer Partners
There is no limit to the number of employers a nursery can partner with through the scheme. A single nursery could have partnerships with several local businesses, each contributing financially each month and each providing a reliable source of income. For nurseries in areas with large employers nearby, actively promoting awareness of the scheme to local HR teams could be a worthwhile initiative.
Conclusion
Nurseries stand to gain significantly from the workplace nursery salary sacrifice scheme. The financial contributions from employer partners provide reliable additional income, the formal partnership contracts create planning certainty, and the scheme strengthens relationships between nurseries and local businesses. For any nursery that has not yet engaged with salary sacrifice nursery fees arrangements, exploring these partnerships is a genuinely worthwhile step.