Tir na n-Og - Tax Efficient Scheme for Staff
Tir na n-Og (the magical “land of the young” in Celtic mythology) is a non-profitmaking nursery founded by Bangor University located in Normal Site, Bangor. The Nursery is open to all, including university students and staff and members of the public.
The main nursery has 50 childcare places, 20 for infants from 3 months of age and 30 for pre-school toddlers. The Nursery is open Monday to Friday, with part-time and full-time places available. Children can start at the Nursery throughout the year, subject to availability.
At Bangor University, we are delighted that we can provide University employees with more affordable childcare via our salary exchange arrangement. This document aims to explain these efficiencies in more detail; answering questions you may have and information which you will need to take into consideration when deciding whether to participate.
Who is eligible to participate?
This arrangement will only be available to you if you are an employee of Bangor University and have parental responsibility for any child placed in the Nursery. This is one of the conditions required to ensure that a nursery place is not taxable as a benefit in kind.
What are the general effects of reducing salary?
The tax-efficient scheme is no different in principle to other salary exchange benefits offered by Bangor University (such as the Cycle to Work scheme). If you participate in the scheme, you will pay a reduced amount of tax and NIC and will therefore be better off each month.
As with other salary exchange benefits with Bangor University, you cannot reduce your salary to a level below the National Minimum Wage (NMW). You may therefore have to restrict the level of exchange under this scheme to ensure that your earnings still remain above this level.
Employees should be aware that a reduction in taxable salary may affect other University and state benefits such as Statutory Maternity Pay and Statutory Sickness Payments. It might also affect more general financial matters such as mortgage applications.
What if I am claiming Tax Credits?
Tax credit entitlement is based upon the level of earnings you are receiving. Therefore if you are reducing your salary you may actually be entitled to more in tax credits. There may, however be a potential adverse affect on the childcare element of the Working Tax Credit (WTC) you are entitled to.
If you are currently claiming the childcare element of WTC, you should consider the likely impact on your net disposable income. In order to make a decision please contact the HM Revenue & Customs helpline on 0845 300 3900 or website: www.hmrc.gov.uk/taxcredits/
What if I want additional childcare sessions?
In the event you require childcare sessions outside those you have already agreed to under salary sacrifice arrangement, then at present, the cost of these additional sessions will need to be made outside the salary exchange scheme.
What if I want to change the number of childcare sessions?
If you would like to withdraw from the scheme, please continue as you currently do and give four week’s notice of the changes you would like to make, both to HR and to the Nursery Manager. This will enable you to enter into a revised salary exchange agreement which reflects the new childcare arrangements required.
What happens if I have more than one child at the Nursery?
You can exchange the full costs of the fees for your children as long as the reduction does not take your salary to below the NMW.
How long does the arrangement last for?
The salary sacrifice arrangement with the Nursery will run from 01 September to 31 August each year. This means that you will only be able to opt out of the proposed arrangement during September unless you qualify for a lifestyle change within this period, or other exceptional circumstances and this will be at the discretion of the University.
How do you confirm the changes to my terms and conditions of employment?
As you are giving up your right to an element of your salary, there will be a need to amend your terms and conditions of employment. This will be done via an amendment to your contract, authorising us to reduce your salary based upon the childcare you require.
How do I proceed?
You will be required to select the level of salary exchange you require until September, when you will again have the opportunity to change your arrangements for the year ahead.