Can someone explain TaxFree Childcare?

[Lavender19Brown]

Hi,

I have 2 kids, one is 5 and one is 2, we have been paying for Nursery care without any support or credits etc.
I stumbled across eligibility for support with childcare, done a lot of reading and applied online, we now have an online account, we have been told we are eligible for tax-free childcare and the code for the 2 year old with the new childcare 15 hours free....

However, Is is as simple as top up the GOV account and give the information over to our childcare provider? I have linked the nursery to account and I now have to top it up, but how do I know how much I need to top it up by?

Also WHY does no one want to tell you these entitlements?

If any one can share any advice or support I would really appreciate it.

You pay the money into the childcare account then the government add the 20%.
once it’s all there you transfer the total to nursery.
you know how much to top up as it’s 80% of your invoice

Multiply your nursery invoice by 0.8 and this is the amount you need to put in the account. The government will give you the remaining 20% up to a maximum of £500 per quarter.

Not sure how you've missed it, all my parents know about it/use it to pay me.

All the info is on childcarechoices.gov.uk

Is there anything else we are entitled to that I am missing?

Thanks for that, if my 5 yr old has wrap around care at school, can I use it to pay for this?

Yes if they are ofsted registered.

This.

You will have to tell the government account to pay it out though. It can be a Regular payment or I pay the exact amount each month.

I just didn't know?! I don't have any friends around me with young children and the nursery and school haven't ever mentioned it!?
Feel rather silly actually.

Do you do it as a 'one off' payment rather than a monthly or weekly?

Don't give nursery the details, find them on the payee database and send the payment to them

You add in 80% of the nursery fee, the government then adds the top up.
So if you add in £80, it will be topped up to £100.

You only get £500 of top up every 3 months (per child), so you can put in £2,000 and get the £500 every 3 months. You don't have to add this in all at once, each time you add an amount in, you'll get the equivalent top up, until the £500 runs out.
If your childcare is more than £2,500 for three months, you'll need to pay all the costs above that.
If less than £2,500 for 3 months, just add in 80% of the cost and you'll be covered.

You also need to remember to log in every so often (every 3 months I think) to reconfirm your details to confirm you're still eligible. If you don't do this, you'll lose the top up until you reconfirm.

You can do whichever makes sense for your circumstances. I do a one-off payment every month as the amount I need to pay varies.

So we roughly pay £1000 per month, so I will be over the £2500 for 3 months.
So what should I pay in?
If you don't spend it all, does it remain in the account?

I have just set a reminder to re confirm it.

If your five year old started nursery age 1ish I'd imagine you missed this because that was around the time they replaced vouchers with the tax free childcare system, so people weren't maybe talking about it as much.

I pay 90% into my account because my childcare cost is so big I don't get the 20% top up every month. I have an account for each child, I pay school childcare from it as well.

I use the website https://taxfreechildcarecalculator.com/
to calculate it all.
I pay the same amount each month as a regular payment from tax free account, and it goes from my bank account as a standing order a few days before.
I'm surprised it wasn't on any of your nursery forms, I think when I gave ours our direct debit details there was a bit about if you were using tax free childcare so I checked it out.

It remains in the account if you don't use it and you can also withdraw it back to your bank.

I pay various providers through it. Used to be nursery, now it's after school club and summer sports camps since they got themselves registered. Whenever I need to pay for any of it I pay 80% of it into the account, wait for it to clear and be topped up then pay it onwards. It's really convenient.

You get £500 every three months. So if your nursery bill is £1000 pay £800 in and £200 will be automatically added, same the next month the following month that might take you over the allowance so you wouldn't get it all and you'd need to top it up further.

If you pay £1,000 a month then you can do

Month 1 - you pay in £800, get £200 top up
Month 2 - you pay in £800, get 200 top up
Month 3 - only £100 top up left so you'll need to pay £900

I think nursery won’t have told you about it because sometimes the payments take a few days to go through to them, the first month I used it the payment didn’t go through at all and I had to ring them to get them to send it. My nursery really push you to pay them by direct debit.

Yes be aware.payments aren't instant. They won't arrive over weekends and bank holidays.

It's a pain in the bloody backside to use - even worse if payday falls around a weekend and diabolical if it's a bank holiday!!! However, where nursery costs are concerned, it's definitely worth persevering with it and saving your 20%. Just a rather long winded process unnecessarily really.

Pay 80% of your bill into your account and then, once it's cleared in there and they've topped up the other 20% you can pay it out to your providers.

If you pay in during a working day, it'll clear (usually) at some point that same working day. If you pay in in an evening it'll be the next day it clears in there ready to pay out. If you pay in on a weekend, it'll be the next working day.

Both my child minder and after school club are understanding of the intricacies of TFC. The only way around its timings is to have a month's buffer payment in there so you're always a month ahead so to speak.

Is tax free childcare given to everyone using childcare regardless of their income, unlike child benefit which high earners are not eligible for?

@Ihateslugs I think your household income has to be below 100k a year

It's similar to child benefit actually. If either earns over £100k, then you lose the entitlement. It's not based on total household income.

There is also a minimum earning level for each parent (16 hours a week on minimum wage).

Many thanks for the calculator link @HiCandles.

Im on a r8diculously tight budget trying to get together my 1st payment returning to work.

I worked out 80% of my invoice so been saving for that.
Im hoping 1 of you are a maths wizz & explain what im missing, as ive had a panic attack this morning getting confused.

My invoice will be around 720

I worked out i would need to pay in 580 (which is the 80%)

But. If i pay in 580.. wont i only get 20 % of that which would take me to 690 rather than 720?
Im in such a muddle and really these 20/£30 are important as i can put on my electric etc instead