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  1. The Workplace Nurseries' Salary Exchange Scheme is for employees of the University of Cambridge who have accepted a staff place and are users of the University's Workplace Nurseries' at Edwinstowe Close or West Cambridge.
  2. The Scheme enables employees to benefit from tax and National Insurance savings on their full nursery fees.
  1. Under the Workplace Nurseries’ Salary Exchange Scheme, an employee of the University of Cambridge signs an amendment to their Contract of Employment to receive a lower salary – a ‘salary exchange’– in return for payment of childcare provided by the University’s Workplace Nurseries at Edwinstowe Close or at West Cambridge.
  2. The nursery fee values are deducted from your gross salary, before tax and National Insurance is applied.  This is how you make savings on your University nursery fees.

 

  1. 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.
  2. 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.
  3. Students are not eligible to join the Workplace Nurseries' Salary Exchange Scheme.
  1. 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.  Be aware that all Salary Exchange Schemes you are part of will be taken into account including pension, cycle scheme etc.
  2. It is University policy that membership in the exchange scheme may only commence from the second month of nursery occupancy. Fees for the first month must be settled directly with the Nursery by cheque or Direct Debit.
  3. 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?'

Salary Exchange Scheme Application Form

  1. 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, for the verification of application data and to issue a change of contract letter.
  2. Your salary will then be reduced from the agreed date and the nursery fees will be invoiced directly to the University. You will receive written confirmation regarding the contractual change to the terms and conditions of your employment.
  3. If you are about to take up a nursery place, note that nursery management requires that the first month's fees must be settled directly with the nursery by cheque or Direct Debit.  (They will not take cash or childcare vouchers as they need to have bank details) 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.
  4. 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, please contact Nursery Management.
  5. Your salary exchange deduction value will appear on your payslip in the month you indicate as the date you wish to participate in the scheme. This deduction will pay the fees for that month i.e. the November deduction pays for Novembers nursery fees.

The Workplace Nurseries’ Salary Exchange Scheme enables you to save tax and National Insurance contributions on your nursery fees. (Approximately 30%.)  The higher your nursery fees, the more savings you make.

 

  1. 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.
  1. 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
  • Sibling starting nursery/sibling starting school
  • Early Years Funding applies
  • National Minimum Wage issues
  1. You will be liable for any differences between nursery fees and the amount exchanged through the scheme.
  1. 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 'Length in Scheme' - above - for the list of acceptable Lifestyle Changes.
  2. To apply for a change in membership, complete and return a Workplace Nurseries' Salary Exchange Scheme: Renewal/Request for Change 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.
  3. 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.
  1. If you undergo a significant Lifestyle Change (see Length of time in the Scheme) 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 booking pattern for any other reason, you cannot alter your Workplace Nurseries' Salary Exchange Scheme membership due to HMRC regulations.
  2. 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.
  3. 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.
  4. 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.
  5. If your childcare requirements are likely to change frequently, the Workplace Nurseries' Salary Exchange Scheme may not be appropriate.
  1. Under legislation relating to the provision of non-pay benefits during maternity leave, University arrangements state that 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, (known as Maintained Benefit) depending on the following:
  2. 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.
  1. If you do not 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.
  2. 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

  1. 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.
  2. 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.
  3. The University will provide you with the benefit of University nursery fees at no cost to yourself from week 19 of your maternity leave.
  4. The amount of Maintained Benefit 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.  The Maintained Benefit will be paid directly to the nursery to pay your nursery fees. However making a change to your nursery booking pattern between the 15th week before your due date and receiving SNP, which results in a fee change, may have an impact on your Maintained Benefit.  For more information please contact Sue Davis on (01223) 765305 or email.

Option 2: in receipt of SMP or MA only

  1. 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.
  2. The University will provide you with the benefit of University nursery fees at no cost to yourself from week 1 of your maternity leave.
  3. The amount of Maintained Benefit 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. The Maintained Benefit will be paid directly to the nursery to pay your nursery fees. However making a change to your nursery booking pattern between the 15th week before your due date and receiving SNP, which results in a fee change, may have an impact on your Maintained Benefit. For more information please contact Sue Davis on (01223) 765305 or email.
  4. 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 Maintained Benefit 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.

1. If you have not been eligible to receive maintained benefit during your period of leave, but want to re-start your Workplace Nurseries Salary Exchange on your return to work, please download, complete and sign a Renewal/Request for Change 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 again. You should indicate that the reason for this request is due to your return from maternity/adoption/shared parental leave.  This complies with HMRC regulations and allows time for the payroll deduction to be set up, for the nursery accounts department to be notified, for the verification of the details provided and to issue a change of contract letter.

 

2. If you received maintained benefit 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 period of 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

a.            If you opted to take University Contractual Maternity Pay, your membership in the workplace Nurseries Salary Exchange Scheme will need to be reinstated using the financial details contained in your End of Maintained Benefit letter.

b.            The Childcare Office will inform your nursery of your return to work and make arrangements to provide the University contribution of your nursery fee allocation for your last month.

c.             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.

d.            The Childcare Office will arrange this with your nursery and will also reinstate your original salary exchange deduction value for the following months.  Should you wish to change this value, maybe to accommodate fees being paid for two children, you will need to send in a Renewal/Request for Change form, indicating for each child how much you wish to have deducted monthly towards your nursery fees. Your salary will then be reduced from the agreed date and the nursery fees will be invoiced directly to the University. You will receive written confirmation regarding the contractual change to the terms and conditions of your employment.

Option 2: in receipt of SMP or MA only

e.            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.

f.             However, if you return to work at the University, your membership of the Workplace Nurseries Salary Exchange Scheme will need to be reinstated. You will need to download, complete and sign a Renewal/Request for Change 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 again. You should indicate that the reason for this request is due to your return from maternity/adoption/shared parental leave.  This complies with HMRC regulations and allows time for the payroll deduction to be set up, for the nursery accounts department to be notified, for the verification of the details provided and to issue a change of contract letter.

If you claim University Contractual 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 for on your behalf during that time. This will be arranged through the Childcare Office and Payroll upon completion of the required 3 month period.

No. Although you agree to receive a lower gross pay by entering into a salary exchange arrangement, both overtime rates and pay review policies are based on reference pay* so as not to disadvantage those employees participating in the scheme.

*Initial pay' prior to the deduction of 'sacrificies'.

As the maximum Additional Voluntary Contributions (AVCs) you can pay are calculated on the amount of taxable salary received, the amount of AVCs you can purchase may be affected. You should contact the Pensions Section if you require advice about your particular circumstances.

No, as the cost of your childcare under this scheme is not a tax liability to you.

  1. When you exchange pay in return for a benefit that is exempt from National Insurance (NI) contributions you do not pay NI on the exchanged portion, only the actual earnings. As your entitlement to some benefits is based on the amount of NI contributions that you pay and others are based on the amount you earn, joining this scheme may affect your current or future entitlement to benefits including:
  • Incapacity Benefit
  • State Pension
  • Statutory Maternity Pay
  • Shared Paternity Pay
  • Statutory Sick Pay
  • Working Tax Credit
  • Child Tax Credit
  1. For more information about how these benefits would be affected by a salary exchange arrangement, contact the relevant benefit provider.
  1. The effect of a salary exchange for nursery fees on pension provision is dependent on the rules of your 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 rejoined 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.

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

Download and complete a Workplace Nurseries' Salary Exchange Scheme: Membership Withdrawal Form. You must return this form to the Childcare Office before the 21st of the month preceding the month in which you wish to withdraw from the Scheme.

  1. The University cannot offer independent advice and can only provide information about the scheme.
  2. You may want to consider seeking independent advice before making a decision—you can get advice from a variety of sources, such as your Union, the Citizens' Advice Bureau, an independent financial adviser, your accountant, or your solicitor/legal adviser.
  1. For further questions about your participation in the Workplace Nurseries' Salary Exchange Scheme, please contact:

Manager of Childcare Services

Childcare Office

21 Trumpington Street

Cambridge CB2 1QA

Tel: 01223 (7)65305

  1. For information relating to Early Years Funding at the nursery or to change your nursery booking pattern/book extra sessions, consult the University Nurseries pages.
  2. For queries on tax matters, the Finance Division's Tax and Property team may be able to help you.
  3. Questions on pensions should be directed to the Pensions Section.