Nursery Fee Salary Sacrifice Scheme

Details of a scheme for employees of Oxford University using the University's in-house or private workplace day nursery provision.

Salary Sacrifice application form (106kb) Salary Sacrifice application form (127kb)

Introduction

Under current legislation and HMRC regulations, new or existing employees of the University (but not employees of other organisations working within University departments) are able to benefit from savings on the cost of fees at university nurseries if they are eligible to join the University Salary Sacrifice Scheme.

Under this scheme, the employee agrees to reduce his/her salary by the amount of his/her nursery fee and in return benefits from lower tax and national insurance deductions on the reduced salary. The salary deduction is paid direct by the University to the nursery provider.

The scheme covers all the university nurseries (Bradmore Road, Jack Staws Lane , Mansion House and Woodstock Road), as well as the University-owned spaces with KidsUnlimited, Oxford Montessori Schools, Co-operative Childcare and Childbase under a Workplace Nursery Agreement.

Under current legislation, the scheme only applies to nurseries where the employer takes part in "financing and managing the provision of the care”. Employees using other nurseries are therefore not eligible for the scheme.

The employer is permitted to use any savings it makes through the scheme as it sees fit. The University invests its savings in childcare provision.

How does the scheme work?

Employees who decide to participate sign a written agreement amending his/her employment contract to reduce salary by the equivalent cost of their nursery fees. The fees are paid by the University direct to the nursery provider. The fees are deducted retrospectively, i.e. the nursery fees are deducted from salary at the end of the month for that month's nursery fees.

Other conditions of the scheme

This scheme is exclusive to employees of the University of Oxford (and not employees of other organisations working within University departments).

The employee must be using university nursery provison, or must have been offered a place at a university nursery, before applying to participate in the Nursery Salary Sacrifice Scheme.

The nursery place or places may be part-time or full-time.

All employees using university nurseries are eligible, provided that their his/her salary is greater than the cost of their nursery fees (as this is an HMRC requirement). However, employees in receipt of Statutory Maternity Pay or on unpaid leave (whether for maternity, sick leave, or other reason) will need to make alternative arrangements with Childcare Services to pay the full nursery fees during this period. In the case of CUFs and other joint appointments, the University's share of the combined salary must be greater than the cost of the nursery fees.

As required by the general conditions for salary sacrifice schemes, the University has a representative on the management committee of each nursery, and the University's Childcare Services Team is actively involved in managing the nurseries.

How does the employee benefit?

Under the scheme, the employee's income tax and national insurance are based on the new (lower) salary, thus allowing a saving to be made.

Employees who are members of the OSPS pension scheme or USS pension scheme will pay pension contributions based on the normal (unreduced) salary.

How does the University benefit?

The University benefits from the scheme by making savings on employer's national insurance contributions, which are based on the employee's reduced salary. The University uses these savings to invest in childcare provision, for example by increasing the number of nursery places it provides.

Salary sacrifice and maternity leave

While you are on Statutory Maternity Pay or unpaid leave (whether for maternity, sick leave, or other reason), you will have to cease participation in the salary sacrifice scheme and arrange to pay the full fees direct to Childcare Services. When you return to work you should complete a new salary sacrifice form in order to rejoin the scheme and re-commence the deductions from salary.

Leaving the scheme

You may only withdraw from the scheme when your child leaves the nursery, or if you experience a ‘Life Change Event’ (see below), or if your employment ends.

Parents must inform the Childcare Services Department in writing ( childcarefinance@admin.ox.ac.uk ) giving at least two months' notice if they intend to leave the scheme. Parents are also obliged to provide at least two months' notice to their nursery provider.

When the employee leaves the scheme and continues in employment with the University, the deduction from his/her salary will be discontinued.

Inland Revenue approval

The University has received HMRC approval for the scheme. The scheme will be reviewed and, if appropriate, amended or withdrawn if HMRC rules change.

What is a Life Change Event?

If you experience a “Life Change Event”, you may choose to either withdraw from the Scheme or make changes to your salary sacrifice arrangements. In this case you will need to notify the University in writing via Childcare Services, giving two months notice.

A “Life Change Event” as defined by HMRC is:

  • leaving to go on maternity leave, parental leave, paternity leave or adoption leave

  • returning from maternity leave, parental leave, paternity leave or adoption leave

  • termination of your or your partner’s employment

  • change of your or your partner’s employment or hours of work

  • relocation - home or office

  • death of a family member or dependant which affects your use of the Childcare Scheme

  • marriage, divorce or legal separation

  • significant change in childcare arrangements/circumstances, e.g. child starts school

  • long term sickness, or starting receipt of long-term disability benefit

  • returning from long-term disability

  • long term sickness of a child

  • the ending of a Life Change Event