Please help me with Tax Free Childcare

[eensyweensySpider]

DS is due to start nursery this summer (date not been confirmed yet) and I'm trying to get my head around how the Tax Free Childcare scheme works. I've checked and that's the option we are eligible for and nursery is definitely accepting this form of payment.

I've got as far as opening an account on the gov website and we have a savings account with money put aside to cover at least the first 6 months of DS's nursery fees. But this is when I'm getting a bit confused / things not being clear to me.

• Do I transfer the money over now, or when DS starts.

• Do I transfer all the money or monthly? Does it matter?

• Does the amount get topped up as soon as it hits the gov account or does the gov pays the nursery directly with the "top up" fund?

• Can I take money out once I've put it in?

• What have I not thought of?

It might be easier if you just let me know how YOU do it so I can see how it all works :)

Thank you 😊

Hi , Iam a childminder and parents use tax free to pay me, they put their 80% in each month the government then tops it up and it gets sent through to me. The government contribution does have a limit covering each 3 month period I think. I would not recommended putting all your money into it was even though you can get it back out it will be a palaver. But also what happens if you have a sudden expense and need that money ?

Sorry missed a question no the government does. Ot pay the nursery direct it’s added to your money I think it’s quite quick then you have to send through to the nursery. Generally if parents start payment before 2 pm I get it the next day.

There’s a limit on how much the government will give you in a 3 month period so I wouldn’t transfer in too much otherwise you won’t get the benefit of it. You can take the money back out that you’ve put in but obviously not the top up they give you.
It gets topped up within the account so you then transfer the nursery the full amount from the tax free account.
I really wouldn’t put the money in until your baby starts nursery; you don’t know what might happen during that time and at least in a bank account you’ll be earning a little interest.
You also need to reconfirm your details each 3 months or they won’t keep topping it up

Also trying to get my head around this.

Can each parent have their own tax free childcare account or is it one account for the child and both parents can pay into it?

I gave up with it because the system was a complete pain in the arse. It turned into more bother than it was worth!

I’ve just sorted mine so hopefully I can help!

Do I transfer the money over now, or when DS starts.
I’d wait until he starts or your money is tied up unnecessarily.

Do I transfer all the money or monthly?Does it matter?
I do it monthly, DS’s nursery bills us monthly so I just transfer 80% of the bill to the tax account. You get I think £500 Max top up per quarter so I wouldn’t transfer more than necessary in case you go over.

Does the amount get topped up as soon as it hits the gov account or does the gov pays the nursery directly with the "top up" fund?

Yes it tops it up as soon as you transfer money in.

Can I take money out once I've put it in?

I’m not sure.

what have I not thought of

Have you made sure you’ve correctly identified your sons nursery on the list so you know who to pay? Have you given the nursery the reference number they’ll receive the payment from?

@Livinginlalaland21

I gave up with it because the system was a complete pain in the arse. It turned into more bother than it was worth!

Really? I found it very straightforward.

Do I transfer the money over now, or when DS starts

Whenever you want. You'll only get £500 in top ups per quarter so i suppose if you start now you can build up if that makes sense.

Do I transfer all the money or monthly? Does it matter?

I do it monthly. If you do it all now you'll get the max allowance but then no more top ups until next quarter iyswim

Does the amount get topped up as soon as it hits the gov account or does the gov pays the nursery directly with the "top up" fund?

The account gets topped up. Can take a couple of days to be available to use sometimes.

Can I take money out once I've put it in?

You can. Obviously only what you've put in. You can't withdraw government top ups.

-What have I not thought of?

As above be mindful top ups can take a couple of days to show and nursery will want paying on a specific date.

We pay money in monthly at payday. We worked out a set amount to pay in.

You can get a maximum of £500 per 3 months, up to £2000 per year. It gets topped up almost immediately but you won’t necessarily get the same amount topped up each month due to the £500 limit. So if you want to pay in a fixed amount you have to account for this. In months 1& 2 we have a small surplus which covers the reduced top up in month 3.

I believe you can’t start until 1 month before start of nursery.

Our nursery bill is £867pcm (£50 per day x 4 days per week x 52 weeks), we pay in £700 pcm and the rest is covered by the top up.

Sorry meant to say £50 per day x 4 days per week x 52 weeks divided by 12 months!

In the Manage My Account section, there is the option to transfer money out of the childcare account back into your account.

Are the top ups on certain dates or does it depend on when you open your account? Mine says I am due £328 but I only opened the account in Feb.

• Do I transfer the money over now, or when DS starts.

Now! You get £500 top up per quarter so start now to maximise government top ups.

• Do I transfer all the money or monthly? Does it matter?

It doesn’t matter except that you need to transfer enough to get the £500 per quarter. But there’s no difference whether you transfer it monthly or quarterly or weekly!

• Does the amount get topped up as soon as it hits the gov account or does the gov pays the nursery directly with the "top up" fund?

It gets topped up pretty much immediately. Then you need to set up the nursery as an authorised childcare provider on your account and pay them via that. I would practice this (do a test payment for £1 or something).

• Can I take money out once I've put it in?

Yes but minus the top up.

• What have I not thought of?

The idea of a test payment perhaps? Also you have to review your details every 3 months - don’t forget to do this or it can cause delays.

You can start paying into it as soon as you're off maternity leave, even if you don't require childcare at that point. I signed up as soon as I was eligible to take advantage of the "free" money so had about 10 months worth of money in there before we needed it. We pay in the maximum per quarter in one go (£2k although as it was a leap year in 2020 you got an extra £80 that quarter) and then you just add the provider, in our case the childminder, to the account. Then when we get our monthly invoice, I just go into the account and transfer the money. The government pays your top up the same day as you pay in the money and we've found it really straightforward. It can be used until they're 11/12 (longer if they have special needs) and you can also continue using it if you're no longer eligible, you just won't get the £500 top up. Or alternatively, you can withdraw the money but again minus the top up. I honestly don't understand how people can find it complicated, you just have to plan when you add your money to get the most out of the £2k bonus payment.

www.moneysavingexpert.com/family/tax-free-childcare/

Just read this, it's really clear :)

@brainstories568

Interesting to read about starting paying into this while on maternity leave. So say if I start paying the 200p/w in as soon as baby is born I'll be getting the 'free' top ups and when I go back to work I'll have a bit saved up for when I start paying? Is that allowed, if I don't pay out anything while on maternity leave? Seems to make sense to bag the bonus instead of any savings lingering in an account what with interest rates so low?

The rules say you can’t pay in until 31 days before you return to work. On maternity leave you remain eligible for it for existing children, but first child it’s 31 days before you use the childcare.

@NotMeekNotObedient you can't pay into it whilst you're on mat leave/SPL, but providing you're "at work" in some capacity (in my case, extended sick leave for chemo) then you can start paying into it even if you don't need the childcare straight away. So I came off mat leave and started sick leave in Jan 2020 but I didn't need the childcare (or return to work) until Nov 2020 but we could still build up the tax free bonus for those 10 months when we weren't actually spending money on childcare as I was still paid my normal salary from work even though I wasn't there. I don't know if it would change if you were only eligible for the statutory sick pay from the government though.

@megan2018 I believe it's 31 days before you come off mat leave/shared parental leave, which for most people might be when they start needing paid childcare. But in the situation described above it was a further 10 months before we actually needed childcare and likewise if people live near relatives, I guess they might not need to pay for childcare immediately but can still benefit from the top ups by starting before they need to do so, if they have the money available.

How does it work when you have more than one child when it comes to top ups? Is it £500 per quarter per family? Or per child? We have relatively low childcare costs but we get childcare vouchers but our bill will go up soon so we’re thinking of switching over.

As far as I'm aware it's per child so if you've got two kids then you'd have two accounts and get the top ups in the respective accounts. So if you get a combined bill from nursery then you'd have to ask them to give you a breakdown of the fees for each child and then just pay them separately.

www.childcarechoices.gov.uk/guides/parents-using-your-account

Thanks everyone so much for your comments and help! I'm keeping an eye on this thread and will revisit all your answers when DS starts in a couple of months x