Tax free childcare

[Humphries2018]

Hi all,
I’m just looking for some advice on tax free childcare. I’ve set up my account online and I’ve arranged for a standing order of £702 each month to go into the account (these are the actual nursery costs each month) when do I get the 20% government top up into my childcare account? I was just thinking that if I paid in the £702 for the 1st month and then dropped my standing order down to my actual cost with the 20% would that work? Is the 20% paid into
The childcare account each month? Sorry if this post is confusing, I’m just so confused with how it works! Thank you

I don;t think they top it up, I thought they took the money out of your pre-tax salary so you basically don't pay tax on that money.

So basically you'll see £562 come out of your account and £702 in your childcare account. That's how ours works anyway.

Oh, if you've set up a SO for £702 then I think you'll see £842 in your account monthly...not sure.

If you pay 80% of the nursery fees into the account, the top up money is automatically added on. You then add your nursery onto the account and pay them from there.

I pay 80% of the bill into my account - the government money goes on within about 20 mins normally.

Hi there. You can pay in 80% of the total nursery bill and then the remaining 20% will be topped up automatically.
However, like you the first time I didn't realise this and put in the full amount. You should get the difference refunded into your account quite quickly,then withdraw if you like. In this scenario you'll need to make the full payment to the nursery. However for the next payment/s you can simply put in the 80%, this will be then topped up.

The top-up appears when the money has cleared in your account. Your plan should work fine.

Tbh I was quite surprised at how unhelpful the system was - I thought it would have a tool to tell you how much to pay in to get what you want. The maths isn't that complex but I think it's something a lot of people will get wrong!

Remember to pay the money over to the nursery after the government have added their top up.

Standing orders are not great as they do not work when there are non-working days. The fastest way to pay in to the account I think is by using a debit card on a working day before 3pm.

Top-up should be fairly quick on a working day. Once payment has cleared and top-up added (max top-up of £500 per child, per 3 months, unless child is disabled) then you can do payment to provider. Allow 3-4 working days for payment to provider and try to do things prior to 3pm so they are started that day not left until next working day.

Top-up is added whenever you pay in until you hit the max topup for the period (3 months). So you could pay in £2000 in month 1 and get the £500 topup but then anything paid in month 2 and 3 would get no topup.

20% is wrong... work on 25%.
If you have paid in £702 then it should become £877.50 (£702 x 1.25)
£702 is 80% of £877.50

Thank you everyone, I couldnt find anywhere on the government website where it tells you when the money is added etc. I’ve set the standing order up for the 15th of the month to be paid to the nursery on the 20th so then I will know for sure the top up has been added and the nursery can be paid by the 1st of the month 💐

I set the date to pay the nursery as the day its due as I assumed it would make the payment itself in enough time to meet that deadline. I wonder if nursery have been receiving my payment late every month . Neither nursery has mentioned it

Acorncat, yes I expect nursery has been getting it 3-4 working days later.

May be so common that nursery does not mention it.

Yes it’s super slow and if a weekend or bank holiday interrupts the time scale it ends up taking even longer.

Sorry to jump on thread but seems better in a slower-traffic forum. How soon can I get an account set up for tax-free childcare? DC due in June and hopefully will be going part time to nursery in January 2020.

@heyha I think I opened my account a month before I returned to work (which may be a date before you actually “go back” if using annual leave at the end of the maternity window). Struggling to find where this is written down though so you may be best checking by ringing helpline. Hope that helps.

That's great, @sew3stitch, thank you. I guess they don't want money sitting around as it seems to be fairly much money in> top up in > payment out from what little I've read so far.

Heyha, 30 ish days before you return to work. Not sure they will open an account before that point.

Yes, the money tends not to sit in the account that long... parents pay in, the money clears, the top up is added, then parent activates payment out to childcare provider (or HMRC... as it can be used to pay Employer tax bills that parents employing a nanny get).

www.gov.uk/tax-free-childcare
This says "You can apply if you’re starting or re-starting work within the next 31 days."

Hi all,

I have been using the service for a while and struggle every month trying to calculate how much i needed to pay in and how much the government would top it up by.

I came across this tax free childcare calculator recently which is really good if anyone is struggling?

taxfreechildcarecalculator.com