Workplace Nurseries' Salary Exchange Scheme

The Workplace Nurseries’ Salary Exchange Scheme enables you to save tax and National Insurance contributions on your nursery fees. The higher your nursery fees, the more savings you make. To help calculate your potential savings:

Ready Reckoner

(Please be aware that any figures produced using this tool cannot be taken as a guarantee by the University to deliver such savings identified)

Any full or part-time employee of the University of Cambridge using a full or part-time place at the Edwinstowe Close or West Cambridge University Nurseries’ is eligible. Certain restrictions apply to temporary staff; for verification please contact the Childcare Services Administrator.

You can use the Workplace Nurseries’ Salary Exchange Scheme for as many children as you wish. Where both parents are employed by the University, you can split the salary exchange between you. However, you should consider the split in order to maximise tax savings as there is a greater benefit for a higher-rate taxpayer.

Students are not eligible, but if one parent is a staff member and the other a student with a child occupying a designated student place at the West Cambridge nursery, the staff member may use the Workplace Nurseries’ Salary Exchange Scheme.

Your salary must be greater than the cost of your nursery fees/proposed salary exchange. Furthermore, the exchanged amount must not reduce your salary to below the National Minimum Wage.

It is University policy that membership in the exchange scheme may only commence from the 2nd month of nursery occupancy. Fees for the first month must be settled directly with the Nursery by cheque, Direct Debit or by using childcare vouchers.

You must be able to commit to a minimum of one year's membership in the Workplace Nurseries' Salary Exchange Scheme; see How Long do I have to stay in the Workplace Nurseries' Salary Sacrifice Scheme?

Due to HM Revenue & Customs (HMRC) conditions, the scheme depends on a commitment of membership for a period of one year. Once you have opted to join, you cannot leave the Workplace Nurseries’ Salary Exchange Scheme or change the amount you have agreed to exchange for nursery fees except at the Annual Renewal Date in August unless your child leaves the nursery or if there is a significant personal lifestyle change.

Acceptable lifestyle changes are:

• Annual Renewal (1 August each year)
• Marriage or civil partnership
• Notification of pregnancy or commencement of/return from maternity leave
• Birth or at key stages in adoption of a child
• Change in formal custody arrangements
• Moving House
• Commencement of/return from long-term sick leave, or starting receipt of long-term disability benefit
• Redundancy, loss of job or change in working pattern of partner
• A significant change in working hours (20% or more)
• Commencement of/return from unpaid leave of greater than 3 months (paternity, career break, etc.)
• Decrease in Reference Salary of 20% or more (University staff member only)
• Commencement of or return from an overseas secondment
• Divorce/legal separation/dissolution of a civil partnership
• Death of a partner or dependant

You will be liable for any differences between nursery fees and the amount exchanged through the scheme.

If you undergo a significant lifestyle change (see How long do I have to stay in the Workplace Nurseries' Salary Sacrifice Scheme? above) which results in the need to alter your nursery booking pattern, you can modify the amount you salary exchange. However, if you increase and/or decrease your child's nursery place for any other reason, you cannot alter your Workplace Nurseries' Salary Exchange Scheme membership due to HMRC regulations.

If you currently do not have the booking pattern you want and are looking to increase your place over the next year, you should consider salary exchanging your current monthly fees and cover any future additional hours by cheque, Direct Debit or using childcare vouchers. Using childcare vouchers for this purpose would enable you to make tax and National Insurance savings on the additional fees. The University has a Childcare Vouchers Salary Exchange Scheme.

If you are planning to decrease the hours you use in the nursery over the next year, consider salary exchanging at the amount you expect to reduce to and cover additional fees in the short-term by cheque, Direct Debit or with childcare vouchers to save tax and National Insurance.

The University's Childcare Vouchers Salary Exchange Scheme is more flexible than the Workplace Nurseries' Salary Exchange Scheme; you can make changes to the amount you claim in vouchers every 3 months and vouchers do not have an expiry date. They continue to be valid for any registered or approved childcare until 1 September after your child's 15th birthday (16th birthday if registered disabled). However, it is important to note that due to HMRC regulations no more than £243 per month can be exchanged with childcare vouchers, depending on your tax status.

If your childcare requirements are likely to change frequently, the Workplace Nurseries' Salary Exchange Scheme may not be appropriate.

Early Years Funding (EYF) is a national scheme that funds part-time childcare for all 3 and 4 year olds from the school term after they turn 3. Your child is eligible as follows:

There is further information on EYF available through Cambridgeshire County Council.

Childbase, who manage the University's nurseries, offer Early Years funded hours up to a maximum of 15 hours a week during school term times (38 weeks of the year). This funded childcare is made up of 3-hour sessions and parents can take up to 2 funded sessions a day. You have to pay for the care your child receives over and above the funded hours.

The reduction in monthly nursery fees through EYF is annualised by Childbase so that payments remain consistent rather than being reduced during school term times only. For the purposes of the Workplace Nurseries' Salary Exchange Scheme, this means if your child is over 3 and eligible for EYF, you can check with the nursery for your monthly fees minus the EYF funding and salary exchange this reduced amount.

However, if your child will turn 3 between 1 August (Annual Renewal Date for the Workplace Nurseries' Salary Exchange Scheme) and 31 March and therefore become eligible for EYF within that membership year, you need to carefully plan the amount you salary exchange. HMRC regulations mean you must commit to membership in the Workplace Nurseries' Salary Exchange Scheme for a year without changing the amount you exchange to pay for nursery fees unless there is a significant lifestyle change (see How long do I have to stay in the Workplace Nurseries' Salary Sacrifice Scheme? above). A reduction in your monthly fees due to your child becoming eligible for EYF is not an acceptable lifestyle change. Therefore, consider salary exchanging at the EYF-reduced nursery fee level and cover additional fees in the short-term by cheque, Direct Debit or with childcare vouchers in order to make tax and National Insurance savings. See the University's Childcare Vouchers Salary Exchange Scheme.

Due to changes in legislation relating to the provision of non-pay benefits during maternity leave, if you go on maternity leave and are eligible, the University will provide you with the benefit of the nursery fees at no cost to yourself, depending on which of the following options you take.
To be eligible you must meet the following criteria -

• 1) Be in the Workplace Nurseries' Salary Exchange Scheme at week 15 before your due date, and
• 2) Maintain the exchange value at the week 15 level, until the start of Statuary Maternity Pay (SMP) or Maternity Allowance (MA). Please note that if you reduce the exchange value after week 15 and before your due date the University will provide you with the reduced level of benefit.

If you don't meet the above criteria, you are able to salary exchange until SMP or MA starts, and the University will automatically withdraw you from the scheme.
If you meet the above criteria then you can choose either option 1 or 2 below, depending on your personal circumstances.

Option 1: in receipt of University Contractual Maternity Pay
If you opt to receive University Contractual Maternity Pay, you are able to continue to salary exchange in the normal way during the first 18 weeks of your maternity leave. This is because during this period you will receive maternity pay equal to your normal salary, which can be used for the purposes of salary exchange. After the first 18 weeks, if you are entitled, you will receive Statutory Maternity Pay (SMP) for 21 weeks. You are also able to take up to 13 weeks unpaid leave after this period, amounting to a total of 52 weeks maternity leave.
The University will provide you with the benefit of University nursery fees at no cost to yourself from week 19 of your maternity leave. The amount of fee provided by the University will be based on the rate at which you salary exchanged from the 15th week before your due date onwards. This is calculated by the University once you have supplied the University with your due date. This arrangement will continue until the end of your maternity leave (week 52) or your return to work, whichever is sooner.

Option 2: in receipt of SMP or MA only
If you opt to receive SMP only, or are only eligible to receive MA, from week 1 of your maternity leave, you will not be able to continue to salary exchange.
The University will provide you with the benefit of University nursery fees at no cost to yourself from week 1 of your maternity leave. The amount of fee provided by the University will be based on the rate at which you salary exchanged from the 15th week before your due date onwards. This is calculated by the University once you have supplied the University with your due date. This arrangement will continue until the end of your maternity leave (week 52) or your return to work, whichever is sooner.

To be eligible you must meet the following criteria -   

• 1) Be in the Workplace Nurseries' Salary Exchange Scheme at week 15 before your due date, and
• 2) Maintain the exchange value at the week 15 level, until the start of Statuary Maternity Pay (SMP) or Maternity Allowance (MA). Please note that if you reduce the exchange value after week 15 and before your due date the University will provide you with the reduced level of benefit.

You will receive 2 letters from the Manager of Childcare Services:
1st letter – Introduction to Maintained Benefit – this will inform you of your eligibility to receive nursery fees at no cost to yourself during your maternity leave.  This letter will be sent to your work address.
2nd letter – Starting Maintained Benefit – this will detail the nursery fee payment arrangements for the first and subsequent months of your maternity leave and will be sent to your home address.  (Please use Employee Self Service (www.chris.cam.ac.uk) to check your home address is accurately recorded).

Option 1: in receipt of University Contractual Maternity Pay
If you have opted to receive the University Contractual Maternity Pay, you must continue sacrificing at the same rate up to and including the 18th week of maternity leave to qualify for the continuing provision of the benefit for the remainder of your maternity leave.
The University will then provide the benefit from the start of your 19th week of maternity leave. Should the start of week 19 fall part way through a month rather than at the beginning/end of the month, you will be required to salary exchange in the normal way until the start of week 19 of your maternity leave and the University will cover the nursery fees for the remainder of the month. Nursery fees will be forwarded by the University to the nursery provider (Childbase) on your behalf.

Option 2: in receipt of SMP or MA only
If you have opted to receive SMP, or receive MA, from week 1 of your maternity leave, the University will provide the benefit from that point. Should this date fall part way through a month rather than at the beginning/end of the month you will be required to exchange in the normal way until the day you start your maternity leave and the University will cover the nursery fees for the remainder of the month.  Nursery fees will be forwarded by the University to the nursery provider (Childbase) on your behalf.
Please be aware that should you decide to return to work and receive the University Contractual Maternity Pay in retrospect, you will be required to reimburse the University for the nursery fees they provided on your behalf during the first 18 weeks of your maternity leave.

If you were not eligible to receive employer funded nursery fees during your period of maternity leave and paid your fees directly to the nursery, when you return to work you can rejoin the salary exchange scheme.  To do this, you will need to complete a Workplace  Nurseries Salary Exchange Scheme: Request for Change form by the 21st of the month before you wish your salary exchange to recommence.
If you received employer funded nursery fees during your period of maternity leave you will receive a 3rd letter – End of Maintained Benefit - from the Manager of Childcare Services.  This will detail the final payment arrangements for the last month of your maternity leave and information regarding reinstating your salary exchange.  This letter will be sent to your home address.

Option 1: in receipt of University Contractual Maternity Pay
If you opted to take the University Contractual Maternity Pay, you will need to reinstate your salary exchange.
Should your return to work date fall part way through a month rather than at the start/end of the month, the University will cover the nursery fees to the day before your return and you will be required to salary exchange in the normal way for the remainder of the month.
You will need to ensure that the Childcare Office knows the amount you wish to salary exchange in the month of your return to work as well as the amount you wish to salary exchange on an ongoing basis.  To do this it is imperative that you contact the Childcare Services Administrator on 01223 (7)60901 as soon as possible after receipt of your End of Maintained Benefit letter.

Option 2: in receipt of SMP or MA only
If you opted to receive SMP only, or were only eligible to receive MA, from the beginning of your maternity leave and you are not returning to the University, you need take no further action.
However, if you return to work at the University you will need to reinstate your salary exchange. You will need to ensure that the Childcare Office knows the amount you wish to salary exchange in the month of your return to work as well as the amount you wish to salary exchange on an ongoing basis.  To do this it is imperative that you contact the Childcare Services Administrator on 01223 (7)60901 as soon as possible after receipt of your End of Maintained Benefit letter.
If you claim University Maternity Pay in retrospect for the first 18 weeks of your maternity leave, you will be required to reimburse the University for the nursery fees they paid on your behalf during that time. This will be arranged through the Childcare Office and Payroll upon completion of the required 3 month period.

The effect of a salary exchange on your pension provision is dependent on the rules of your pension scheme.

CPS

Pension contributions are based on the notional salary and therefore would include any salary exchanged. The death in service lump sum is four times the notional salary (three times the notional salary where the member joined or re-joined the CPS on or after 1 December 2009). As the maximum lump sum permitted by HMRC is four times taxable salary there may be circumstances where the lump sum death benefit is restricted.

USS

Pension contributions are based on notional salary and therefore would include any salary exchanged. The death in service benefit is calculated at three times notional salary and therefore would not normally be affected by the exchange. However, the HMRC rules only allow for four times taxable salary so there may be scenarios where the benefit on notional salary exceeds the maximum legally allowed.

If you require further information about the impact of your pension deductions and entitlement please contact the Pensions Section. If you are using any other pension scheme you will need to check the implications of entering into a salary exchange scheme with your provider.

Salary Exchange Scheme Application Form

Download and complete the above form and return it to Childcare Services Administrator, Childcare Office, 21 Trumpington Street, Cambridge CB2 1QA, before the 21st of the month preceding the month in which you wish to start using the scheme. This complies with HMRC regulations and allows time for the payroll deduction to be set up, for the nursery accounts department to be notified, and for Human Resources to verify application data and to issue a change of contract letter. Your salary will then be reduced from the agreed date and the nursery fees will be invoiced direct to the University. You will receive written confirmation regarding the contractual change to the terms and conditions of your employment.

If you are about to take up a nursery place, note that nursery management requires that the first month's fees should be settled directly with the nursery by cheque, cash, Direct Debit or with childcare vouchers as part of standard terms of business. Therefore, any salary exchange arrangement may only commence from the start of the second month. It is important not to apply for membership in the Workplace Nurseries' Salary Exchange Scheme too early.

If you already have a nursery place and wish to join the scheme, in addition to ensuring that your application reaches the Childcare Services Administrator by the 21st of the month preceding that in which membership is to commence, you should ensure you cancel any Direct Debit Instruction you have set up for the payment of the nursery fees. Nursery Management advise that any such Direct Debit should be cancelled by the end of the first week of the month preceding the month from which the salary exchange commences. For further information on this, contact Nursery Management.

You cannot change the amount you have agreed to salary exchange except at the Annual Renewal Date (1 August) unless your child leaves the nursery or if there is a significant personal lifestyle change. See How long do I have to stay in the Workplace Nurseries' Salary Sacrifice Scheme? - above - for the list of acceptable lifestyle changes.

To apply for a change in membership, complete and return a Workplace Nurseries' Salary Exchange Scheme: Request for Change application form by the 21st of the month before you wish the change to begin. Employees are advised to note that because any changes, amendments or variations in membership entail a change to the terms and conditions of employment, you must actively initiate the process of applying for a change in membership. No changes will be made automatically, nor can the nursery management or any other agency affect changes on your behalf. It is your responsibility to take the initiative in reviewing membership of the scheme, and in formally and explicitly requesting any necessary changes.

For further questions about your participation in the Workplace Nurseries' Salary Exchange Scheme, contact:

Childcare Services Administrator

Childcare Office

21 Trumpington Street

Cambridge CB2 1QA

Tel: 01223 (7)60901

For information relating to Early Years Funding at the nursery or to change your nursery booking pattern/book extra sessions, consult nursery management.

For queries on tax matters, the Finance Division's Tax and Property team may be able to help.

Questions on pensions should be directed to the Pensions Section.

Please read the relevant information above before downloading an application form.

• Workplace Nurseries' Salary Exchange Scheme: Application form
• Workplace Nurseries' Salary Exchange Scheme: Request for Change form
• Workplace Nurseries' Salary Exchange Scheme: Membership Withdrawal form

The Ready Reckoner spreadseet will help work out your potential savings using the Workplace Nurseries' Salary Exchange Scheme.

• Ready Reckoner