TL;DR: Halo Pay means your employer pays your nursery fees before tax is taken from your pay. You end up with more money in your pocket — without spending a penny more.
You've probably heard the term "salary sacrifice" and immediately glazed over. Fair enough. It sounds like something from an HR policy document nobody reads. That's why we call it Halo Pay.
But here's the thing: if you're paying nursery fees, Halo Pay could save you thousands of pounds a year. Real money. Not voucher-points-that-expire money. Actual pounds back in your account.
How it works — the 60-second version
Right now, you earn your salary. The government takes income tax and National Insurance. Whatever's left is your take-home pay. Then you pay your nursery fees from that.
With Halo Pay, the order changes. Your employer reduces your gross salary by the amount of your nursery fees and pays the nursery directly. You never see that money — which means you never pay tax or National Insurance on it.
Same nursery. Same fees. But because they come out before tax, you save the tax and NI you would have paid on that amount.
Let's use real numbers
Say you earn £35,000 a year and your nursery fees are £1,000 a month (£12,000 a year).
Without Halo Pay
- Your gross salary: £35,000
- Income tax: £4,486
- National Insurance: £1,794
- Take-home pay: £28,720
- Minus nursery fees: −£12,000
- What you're left with: £16,720
With Halo Pay
- Your gross salary drops to £23,000 (£35,000 minus £12,000)
- Income tax: £2,086
- National Insurance: £834
- Take-home pay: £20,080
- Nursery fees: already paid by your employer
- What you're left with: £20,080
That's £3,360 more in your pocket. Every year. For doing absolutely nothing differently.
Your nursery doesn't change
This is the bit that trips people up. Your child goes to the same nursery, in the same room, with the same staff. Nothing changes for them. The only difference is the payment route — your employer pays the nursery instead of you paying them.
What about my pension and benefits?
Your pension contributions might be calculated on your reduced salary, depending on your employer's scheme. For most people, the nursery savings far outweigh any small pension reduction — but it's worth checking with your HR team.
Statutory benefits like maternity pay are also based on your actual salary. If you're planning to go on maternity leave soon, talk to your employer about timing.
Is this some kind of loophole?
No. This is a specific tax exemption written into UK law — Section 318 of the Income Tax (Earnings and Pensions) Act 2003. The government created it to help working parents with childcare costs. It's been there for over 20 years.
Halo exists to make this exemption accessible to any employer, not just the big corporates with in-house legal teams.
Do I have to do anything?
Not much. You tell your employer you want to enrol, choose your nursery, and confirm your monthly fees. Halo handles the rest — the contracts, the payments, the compliance. Your payslip updates automatically.
The bottom line
If you're a working parent paying nursery fees, Halo Pay is probably the single biggest financial win available to you right now. It's not complicated. It's not risky. It's just a smarter payment route for something you're already paying for.
