Employer-backed childcare model offers stable, tax-efficient support beyond the £100,000 income threshold.
Halo is a new Compliance platform helping working parents address the “childcare support cliff” facing families whose income rises above £100,000.
Under current rules, once a household crosses the £100,000 adjusted-net-income threshold, it loses entitlement to both 30 hours of funded childcare and Tax-Free Childcare. For families with more than one child, this creates a sudden step-change in costs just as careers progress.
Halo’s platform enables employers to provide childcare support through an existing workplace nursery tax exemption (Section318) that is not subject to £100,000 means-testing.
Because it is based on an employer’s role in financing and managing nursery provision — rather than household income — it can be offered to staff regardless of whether they sit above or below the threshold.
“The current system can effectively penalise some parents for earning more,” said Anna Semple, CEO of Halo Benefits. “In London in particular, nursery fees are significantly higher than the national average. A promotion can push one parent over £100,000, trigger the loss of support, and leave the family facing a childcare bill that rivals their rent or mortgage. Employer-backed childcare using an existing exemption is a practical way to smooth that cliff without new government spending.”
Under the existing workplace nursery exemption, employers can fund non-means tested childcare tax-free if they share in the financing of nursery provision for participating employees’ children. This also means the employer would take on defined management responsibilities in relation to that provision and maintain robust records to demonstrate these responsibilities over time.
Halo puts this into practice by providing a digitised contractual framework between the employer, nursery and participating employees using AI, the first of its kind, to capture and structure governance activity in a consistent way. The Compliance platform records cryptographic proofs of key events on a tamper-evident ledger between the nursery and employer, without writing personal data to the ledger itself providing a real-time dashboard and exportable evidence pack so employers can demonstrate that statutory conditions have been met.
Anna continues, “Childcare in the capital is materially more expensive than in most of the UK. A disproportionate share of higher earners are based in London, and nursery costs are significantly above the national average — meaning the loss of support bites hardest where fees are already highest. For many households, the £100,000 limit acts as a barrier to progression. For employers, the exemption gives working parents a real financial boost while helping companies keep experienced and valued employees, who might otherwise reduce hours or leave due to childcare costs”.
London faces a particular combination of high costs and constrained supply because of higher operating costs for nurseries, supply pressure and a growing disparity between London and the rest of the country.
A leading international tax advisory firm has reviewed Halo as a strong compliance model that meets the legislative tests for employer-backed childcare. For employers based in London the platform offers a strong opportunity to mitigate against clear talent and productivity risks they face due to childcare issues.
Anna concludes, “For policymakers and the London employment sector, Halo will be able to help to support a labour market where there is an increasing cost-of-living issue where childcare payments for some families now exceed their housing costs”.
More information: www.halobenefits.co.uk.
