Tax Free Childcare Account

[Tee20x]

Hi,

Could do with clarification relating to tax free childcare and some things I've read online on forums like the Martin Lewis one.

DD is to start nursery in January, I will be returning to work on paper in November but will be on A/L.

When do I need to open the childcare account? Do I do this just as she's about to start or should I do it when it return to work?

I read on here somewhere that I should be paying money in ASAP in order to have a bank of money in the account ?¿ is this correct?

Do people pay in on a monthly basis or can I pay in a lump sum to ensure that nursery is always covered. A sort of nursery savings pot if you like so that I am not having to pay out half of my pay check each month on childcare fees. Does this affect the £500 payments at all?

I know they only pay £500 every 3 months...and the guidance says that I am free to put however much I want into the account but it will not qualify for any "extra" top up.

What I want to know is, will I be losing out on top ups by doing it this way? Or am I better off paying in monthly?

Probably rambling. So tired and been up reading ages.

Thanks :)

Don’t put in massive lump sums - as you say, you won’t get all the top up for it because you can only get up to £500 every 3 months. So in total you can get up to £2k a year, which you would get if you pay in £10k a year. But if you paid all of this in one or two lump sums then you would reach the £500 top up limit. Eg if you put in 5k in January to cover jan-June then you’d only get a £500 top up for that whole period whereas if you split it to put in £2500 in jan and £2500 in April then you’d get £1k top up for that same 6 month period. But you could do a lump sum every 3 months rather than monthly if you prefer. I can’t see how it makes much difference though as surely this money is coming from wages one way or another?

However you are right in that it is worth starting to pay in ASAP because you are eligible for the top up from when you start paying in rather than from when your child starts childcare. So you start getting the extra 20% straight away.

Ah I see. Nursery costs are extortionate - 1677 a month. I have managed to save a little pot of money towards the cost of this as my share of the nursery fees are about 1/3 of my wage (maths is probably a bit off) - but basically wanted to start off with a one off lump sum in there so that I would subsequently then be able to top up little and often out of my regular paychecks without having to pay out near enough £700 a month.

Also another quick one - I've calculated like this as advised on the internet:

1677 x 0.8 in order to work out how much I need to put into the account to reach the correct nursery fee with the gov top up - that is the correct calculation isn't it?

1677 x 0.8 in order to work out how much I need to put into the account to reach the correct nursery fee with the gov top up - that is the correct calculation isn't it?

I don’t think this is quite right since your nursery costs are over £10k/year. Your nursery fees are £20,124/year. If you take off the £2k/year tax relief and divide by 12 that equals £1,510.33 per month that you need to put in (I think).

You do multiply by 0.8, for every 80p you put in they put in 20. So if your nursery fees are 1 pound, and you put 80p in the government will put the other twenty pence in.
It took me a while to figure it, but I’ve been using it for years now

Test it out by putting the first month’s fee in and check it tops up to the full amount

@Justjoinedforthis

Test it out by putting the first month’s fee in and check it tops up to the full amount

Good idea - will do this.

I tried to open an account a few days ago but it wouldn't let me as it was saying I have to return to work within 31 days.

Thinking about it now though it should have worked as I am due to return on the 18th Nov. Will test again.

Our fees are also over the 10k limit to get the top up, so we have 2 months out of every quarter where we get the top up (so only pay in 0.8 of the monthly amount), but then the third month of every quarter we only have £5 top up left so have to pay pretty much the whole amount-such a faff trying to remember which months we need to pay more in!

If it doesn’t work OP it’s worth ringing them… I tired within the 31 day rule with DD, I went back to work when she was six months… so basically at 5 months I tired to apply for the tax free childcare. It kept getting bounced back and basically they said on the phone that the system was based on those that went back to work when their child was a year old.

@SunndyD

If it doesn’t work OP it’s worth ringing them… I tired within the 31 day rule with DD, I went back to work when she was six months… so basically at 5 months I tired to apply for the tax free childcare. It kept getting bounced back and basically they said on the phone that the system was based on those that went back to work when their child was a year old.

Thanks for the heads up on this.

I will try again tomorrow and if it doesn't work give them a call.

In your case what was the resolution? Did they have to process it manually?

@Aurora791

Our fees are also over the 10k limit to get the top up, so we have 2 months out of every quarter where we get the top up (so only pay in 0.8 of the monthly amount), but then the third month of every quarter we only have £5 top up left so have to pay pretty much the whole amount-such a faff trying to remember which months we need to pay more in!

I'm so confused!! Would you be able to just explain this again.

It all sounds like such a faff - hate things like this so much.

www.gov.uk/tax-free-childcare Hop fully this explains the cap- so you need to work out how much you’ll be paying over 3 months. X

I'm due to start doing this. I'm confused too. If my nursery bill is £650 a month, do I put that in and then they top up 20% of that, or do I put in £480 and they top it up to £600?

I've just read the link. So if my bill is £600, then I pay in £480 and they top it up.

You would pay in £480 yes and it will be topped up

I use this site to work out how much needs to be added to get the right top up amount

taxfreechildcarecalculator.com/

I found this calculator really useful to work out how much to pay in each month to get the full top-up without messing it up:
https://www.dailytrendspaper.com/tax-free-childcare-calculator/