Experts highlight how most parents are inadvertently overpaying for childcare by not accessing the full range of employer-supported benefits. Research also reveals that almost 250,0001 UK working mothers of children aged 4 or under will be set to leave their employer due to a lack of childcare support.
While government-funded hours have become a mainstream discussion, high-impact initiatives such as Workplace Childcare – where employers fund nursery placements directly – remain one of the most underused options, leaving families to foot bills that can exceed £15,000 per year.
The “Benefit Gap”: What Parents Are Missing
Many parents rely solely on Tax-Free Childcare or the standard 15/30-hour government funding. These often leave significant gaps, particularly for children under two or for employees earning over the £100,000 Tax-free childcare threshold.
- Workplace Childcare: Employers pay fees directly to the nursery, saving on tax and national insurance contributions for both parties
- Substantial Savings: Higher-rate taxpayers, earning over £100,000 can save over £7,000 per year on fees of £1,700/month, compared to the £2,000 annual cap provided by the government’s Tax-Free Childcare
- Open Eligibility: Unlike childcare vouchers, which closed to new applicants in 2018, Workplace Childcare are open to any PAYE taxpayer whose employer partners with a provider
How Employees Can Unlock These Benefits
To bridge this gap, parents are encouraged to take proactive steps to secure financial support through their employers:
- Audit Your Benefits Agreement: Check your company benefits platform for “Workplace Nursery” or “Section318 Childcare” options. Many employers already offer this but employees are unaware
- Request a Partnership: If your employer doesn’t offer Workplace childcare, ask them to partner with your chosen nursery. Specialist providers like Halo Benefits, a compliance platform for workplace childcare, can manage the administration, making the process cost-neutral for the business
- Highlight the mutual benefit: Workplace childcare under Section 318 helps employers provide a high-impact retention incentive at no additional net cost, while employees save thousands per year on fees
- Check Local Support: For families on lower incomes, Universal Credit can cover up to 85% of childcare costs a vital but often overlooked lifeline
“Childcare is often a parent’s largest monthly outgoing, sometimes exceeding mortgage payments,” says Anna Semple, CEO of Halo Benefits. “By implementing workplace childcare, parents can reclaim thousands of pounds while employers foster a more dedicated, diverse workforce”.
To find out how much you can save visit: www.halobenefits.co.uk for an estimate.
