salary sacrifice
employers can help their employees save up to 40% of their childcare costs AND reduce their own NI bill.
Giving your employees access to affordable childcare brings real business benefits – easier staff recruitment and retention, improved staff reliability, more motivated staff, greater flexibility – yet some employers are not aware of the most cost-effective way of providing real employee benefits.

You will even find that your childcare scheme pays for itself.

The best way for an employee to cut the cost of childcare is to give up some of their salary in return for a benefit from their employer that is exempt from National Insurance contributions and / or tax. This is known as Salary Sacrifice.
The employer is also exempt from National Insurance contributions on the benefit and
can offset the cost of providing the childcare against tax..
 
 
“The early part of the 21st century should be marked by the introduction of pre-school provision for the under fives and childcare for all.”
Gordon Brown after visiting Buffer Bear at Bessborough, London
 
what are the options?
Buffer Bear offers three types of Salary Sacrifice scheme for childcare provision which meet the current legislative requirements:
fee direct @ your workplace
• We work with an employer to set up / operate a Workplace Nursery on their own premises
• The employee gets childcare as a tax-free and NI-free benefit
• The employer does not pay NI on the employee’s benefit of childcare
fee direct @ buffer bear nurseries
• We enter into a partnership with an employer to offer nursery places at local Buffer Bear nurseries as they are required
• The employee gets childcare as a tax-free and NI-free benefit
• The employer does not pay NI on the employee’s benefit of childcare
childcare partners vouchers
• We provide vouchers that can be exchanged for any approved childcare provision
• The employee makes (restricted) savings in NI and Income Tax
- Up to April 2005 the employee does not pay NI but does pay Income Tax on the value of the vouchers
- From April 2005 up to £50 worth of vouchers per week are both tax-free and NI-free (vouchers over £50 per week are subject to full Income Tax and NI)
• The employer does not pay NI on the employee’s benefit of childcare vouchers, but after April 2005 this is restricted to £50 per week of vouchers
 
For the Inland Revenue to recognise a salary sacrifice scheme:
The employee must change their contractual terms to accept a reduced cash salary and an agreed benefit
The money can only be used on certain types of childcare provision
 
 
“Employers have a very important role to play in helping their staff to achieve a [work-life] balance and particularly in helping parents meet their childcare needs. We are committed to supporting them in this.”
Dawn Primorolo, Paymaster General, at Buffer Bear at Barts and The London
 
the best way to help with childcare
 
benefits for employers
 
fee direct @ your workplace
fee direct @ buffer bear nurseries
childcare partners vouchers
Reduced Class 1A National Insurance contributions because the employee’s salary is lower
Nursery / scheme running costs are tax deductible
Employers qualify for tax concessions across a network of nurseries
Employers can create new provision in new locations
Employers can reserve places as and when they are required
Employers only need to subsidise places as they are needed
Employers can offer nationwide provision with just one contract
There is no risk of empty places incurring costs
Employers have considerable influence over the way the childcare is run
Schemes can attract funding via Government initiatives for new childcare places
Employers have considerable influence over in the cost of the childcare provided
Employers have a say in the quality of the childcare provided
Costs are transparent and predictable
Low start-up costs
 
benefits for employees
 
fee direct @ your workplace
fee direct @ buffer bear nurseries
childcare partners vouchers
No tax to pay on salary sacrificed *
No National Insurance to pay on salary sacrificed *
Choice of nursery
Provision tailored to local requirements
Choice of locations
Quality of provision maintained by employer
Priority for highly sought provision
The employer can act to keep fees down
Tax and National Insurance exemptions not limited to £50 worth of vouchers per week after April 2005
 
*changes in the law from April 2005

From April 2005 employers will be able to contribute up to £50 per week per employee towards the cost of any approved childcare scheme as a tax-free and NI-free employee benefit. Contributions to childcare (or voucher) schemes over £50 per week are subject to full Income Tax and NI.

This may mean that certain employees with Childcare Partners Vouchers benefits will enjoy less tax and NI savings after April 2005 than they previously did on NI savings alone.

The £50 limit does not apply to employers’ contributions to recognised workplace nursery schemes such as Fee Direct @ Your Workplace or Fee Direct @ Buffer Bear Nurseries – on both these schemes employees still get 100% of their childcare benefit tax-free and NI-free.
 

how do I get started with salary sacrifice?

Nothing could be easier, because Buffer Bear does all the hard work. We will analyse your employees’ childcare needs and help you decide on the most suitable scheme for your company.

The result is a simple and cost-effective childcare programme that will be a valuable advantage to your employees.

Just give us a call on 0118 953 8588 and we will come and show you how easy it is to set up a Salary Sacrifice scheme in your workplace.

Calculations on this website are indicative because each person’s tax position is unique. Individuals or organisations seeking to implement schemes described should verify arrangements with their own tax advisers.

    
business benefits of providing childcare
• Easier recruitment and retention of staff
• Access to wider base of experienced and
trained staff
• Attractive both to executive staff and parents on low income
• Improved punctuality and attendance
• Greater flexibility in the hours employees
can work
• Improved employee motivation
• Reduced stress and stress-related absence
• Assists in meeting Equal Opportunities and Diversity policies
• Public Relations benefits
 
 
 
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