Childcare salary sacrifice calculator
How much could you save on nursery fees?
Through the workplace nursery benefit, you pay for your child’s nursery place from your salary before income tax and National Insurance. Enter your salary and fees to see your estimated saving, using 2026/27 rates.
- £0Kinsail fee for employees
- No capOn the amount you can sacrifice
- 2 minsTo see your estimate
Who are you?
This helps us show you the right information.
How the saving works
The same nursery place, paid for from your gross salary
With the workplace nursery benefit, your employer provides your child’s place at a registered nursery and you agree to reduce your salary by the cost of it. Because the reduction comes before income tax and National Insurance, you stop paying tax on the money that goes on nursery fees.
Your employer provides the place
Your employer offers a registered nursery place as a workplace benefit, and Kinsail sets up the agreements with them and with your nursery.
You agree a salary sacrifice
You agree in advance to reduce your gross salary by the cost of the place, for a fixed 12-month term.
Tax and NI are worked out on less pay
Income tax and National Insurance are calculated on the lower salary, so the same nursery place costs your household less.
Worked examples
What salary sacrifice could save on nursery fees
Four parents, four salaries. Each sacrifices a year of nursery fees and keeps the difference in income tax and National Insurance.
| Salary | Monthly fees | Tax band | Saving a year | Saving a month | Share of fees |
|---|---|---|---|---|---|
| £35,000 | £1,200 | Basic rate | £4,032 | £336 | 28% |
| £60,000 | £1,400 | Higher rate | £6,066 | £506 | 36% |
| £80,000 | £1,600 | Higher rate | £8,064 | £672 | 42% |
| £110,000 | £1,600 | Over £100,000 | £10,064 | £839 | 52% |
Estimates using 2026/27 income tax bands for England, Wales and Northern Ireland and employee National Insurance at 8% and 2%. They exclude pension contributions, student loans and other salary sacrifice, and are not a guarantee. At £110,000, the sacrifice brings adjusted net income to £90,800, which restores the personal allowance and is why the saving passes 50%.
What changes your number
Six things that decide how much you save
Two parents paying the same nursery can save very different amounts. These are the reasons.
- Biggest factor
Your tax band
Basic rate taxpayers typically save around 28% of the amount sacrificed, higher rate around 42%, and additional rate around 47%. Moving between bands part way changes the blend.
- Over £100k
The £100,000 line
Between £100,000 and £125,140 you lose personal allowance. Sacrificing salary in that range can restore it, which is why savings there can pass 50%.
- Per parent
Funded hours eligibility
Working parent funded hours need each parent to have adjusted net income under £100,000. The limit is per parent, and salary sacrifice lowers your adjusted net income.
- The only limit
The minimum wage floor
There is no cap on the amount, but your pay after the sacrifice must stay at or above the National Minimum Wage for the hours you work.
- Scotland
Where you pay tax
The calculator uses the rates for England, Wales and Northern Ireland. Scottish income tax bands differ, so a Scottish taxpayer’s figure will be slightly different.
- Estimate
Other sacrifices and loans
Pension salary sacrifice, student loan repayments and other benefits all interact with your pay, so treat the result as an estimate and check your own payslip.
Benefit or Tax-Free Childcare?
You can use one or the other, so compare them first
The workplace nursery benefit and Tax-Free Childcare cannot be used at the same time. Tax-Free Childcare is capped, the benefit is not, so the gap usually widens as nursery fees rise.
Workplace nursery benefit
How it works
Salary sacrifice on a nursery place your employer provides
Typical saving
28% to 47% of fees, depending on your tax band
Annual limit
No cap, subject to the minimum wage floor
Income limit
None for the benefit itself
Needs your employer
Yes, your employer offers it
Tax-Free Childcare
How it works
Government adds £2 for every £8 you pay into an account
Typical saving
20% of the total cost, up to the annual cap
Annual limit
£2,000 per child (£4,000 if disabled)
Income limit
Each parent under £100,000 adjusted net income
Needs your employer
No, you apply to the government
Want the detail? Compare every childcare support option or read the complete guide to the workplace nursery benefit.
For employers
Offer a benefit parents can put a number on
Choose “I’m an employer” in the calculator to estimate what your team could save. Kinsail runs the benefit end to end: agreements with employees and nurseries, the compliance meetings, nursery onboarding and the monthly figures for payroll.
- Management fee of 15% of the salary sacrifice amount, plus VAT
- One-off onboarding fee, from £250 plus VAT
- An employer contribution to each nursery, directed by our OFSTED Analysis Tools
- Built in accordance with HMRC's published guidance under Section 318 ITEPA 2003
Childcare salary sacrifice questions
How much can I save with salary sacrifice for childcare?
It depends on your salary, your nursery fees and your tax band. Basic rate taxpayers typically save around 28% of the amount they sacrifice, higher rate taxpayers around 42%, and additional rate taxpayers around 47%. If you earn between £100,000 and £125,140 the saving can be higher, because sacrificing salary can restore your personal allowance. Use the calculator above for your own estimate.
How is the saving calculated?
The calculator works out your income tax and employee National Insurance on your current salary, then again on your salary minus a year of nursery fees. The difference is your estimated annual saving. It uses 2026/27 rates for England, Wales and Northern Ireland and does not include pension contributions or student loan repayments.
Is there a limit on how much I can sacrifice?
There is no cap on the amount. The practical limit is that your pay after the sacrifice must stay at or above the National Minimum Wage for the hours you work.
Will salary sacrifice affect my 30 hours funded childcare?
Funded hours continue as normal and the benefit applies to what you pay on top of them. Eligibility for working parent funded hours needs each parent to have adjusted net income under £100,000. The limit is per parent, not combined, and salary sacrifice lowers your adjusted net income, so it can bring a parent back under the limit.
Can I use it alongside Tax-Free Childcare?
No. Tax-Free Childcare and the workplace nursery benefit are mutually exclusive, so you choose one. Tax-Free Childcare is capped at £2,000 per child a year and the benefit is not capped, so for families paying substantial nursery fees the benefit is often worth more, but it depends on your circumstances.
Does my child have to change nursery?
No. Any registered nursery can join the Kinsail network, so in almost every case your child stays at the nursery they already attend.
What does it cost me as an employee?
Nothing. Kinsail is the only established provider that does not charge employees a fee.
What does it cost my employer?
Your employer pays Kinsail a management fee of 15% of the salary sacrifice amount, plus VAT, and a one-off onboarding fee. Kinsail handles the agreements, the compliance meetings, nursery onboarding and the monthly figures for payroll.
Is this arrangement approved by HMRC?
HMRC does not approve arrangements in advance. Kinsail is built in accordance with HMRC's published guidance under Section 318 ITEPA 2003.
Still unsure? Read all our FAQs or get in touch.
Seen your number? Ask your employer to offer it
Finish the calculator and we’ll introduce the benefit to your HR team for you. There is no fee for employees.