Workplace Nursery Scheme Calculator

A workplace nursery scheme allows employers to provide contracted nursery places as a tax-exempt benefit. Unlike Childcare Vouchers, there's no cap — full nursery costs can be provided tax-free if the employer has a qualifying arrangement with the nursery.

Higher rate taxpayers save 42% of nursery costs (40% tax + 2% NI). Basic rate taxpayers save 28% (20% tax + 8% NI). For £1,200/month nursery fees, a higher rate taxpayer saves over £6,000/year.

Yes for higher costs. Tax-Free Childcare gives 20% top-up up to £2,000/year per child. Workplace nursery saves income tax and NI on the full cost with no cap — significantly better for full-time nursery users.

Yes. The government-funded 15 or 30 free hours can be used at a workplace nursery alongside the employer benefit. The tax exemption applies to the fees you actually pay above the free hours.

The employer must have a contractual arrangement with the nursery — not just pay fees on behalf of the employee. The nursery must be available to all employees. HMRC sets out qualifying conditions in Employment Income Manual EIM21900.

The Childcare Vouchers scheme closed to new entrants in October 2018. Existing members can continue, but new employees must use Tax-Free Childcare or workplace nursery if their employer offers it.

Each parent can claim from their own employer if both employers have qualifying nursery arrangements. HMRC sets no limit on the combined value, making dual earner households particularly well-served.

Claiming Tax-Free Childcare prevents you from claiming the childcare element of Universal Credit. Workplace nursery benefits are different — they reduce your earnings which may affect UC calculations. Check with a benefits adviser.

Workplace nursery can cover children from birth up to school age (5 years in England). The free hours start at 9 months (15 hours) and 2 years (30 hours for eligible families) or 3-4 years (15/30 hours for all).

No. The workplace nursery scheme does not require the nursery to be at or near the workplace. Any qualifying nursery arrangement between employer and provider qualifies regardless of location.

Yes. Workplace nursery savings do not affect Child Benefit. Note that Child Benefit is subject to the High Income Child Benefit Charge for adjusted net income above £60,000 (2024/25).

Employers also save 13.8% NI on the benefit provided (as it's exempt). Many employers pass this saving back to employees in the form of a subsidised scheme or additional payments.