Employers paying nursery, not me - is this legal?

[Madamnit]

Hi there,

I have 2 children and want to go back to work Part time. I will be a couple of hundred pounds down every month but my husband and I have decided it could be worth it to have no gaps on CV and so I can have a break from the kids!

Question is, is it legal if my employers were to pay the nursery direct? If they did this it would mean no monetary loss at the end of the month but what would be the situation with National Insurance and tax etc...?

You're entitled to the first £55 per week tax/NI free, but then you'd have to pay tax/NI as normal after that.

After having taken off £55 per week this amount would go on your P11D as a benefit and your tax code would be altered to reflect this and collect the extra tax and NI.

It is worth investigating whether you would be better off if both you and your husband did the £55 per week salary sacrifice rather than your employers paying the childcare bill.

Yes. There are a number of schemes (my firm is in one - looks at TEDS Premier for example) where you enter into a salary sacrifice agreement and your employer pays the nursery direct. It is different from the voucher scheme where (I understand) your employer pays the voucher provider (who then pays the nursery provider) rather than the nursery if you see what I mean, and is limited to 55 per week (if you're a basic rate tax payer). The scheme that I was in meant I sacrificed all of my nursery fees (no limit) from my salary, which my employer paid direct to the nursery. However, it has to be a nursery within the scheme, your firm has to be within the scheme and there are negatives to consider (such as any benefits based on your salary are based on what's left of your salary after you've sacrificed the large chunk, so things like maternity pay, redundancy pay would be effected).