Tax free childcare

[Bunny2607]

Hi everyone
i’ve just opened a tax free childcare account. Can someone explain to me how it works practically please? So this month our nursery bill was circa £600. How do i know how much to pay in each month? I know its £2 from the government for every £8 we pay in but do i need to work this amount out each month? Thank you

Yeah you would need to work it out so you end up with the full amount. If you need to pay £600 to the nursery, you'd pay in £480 and the top up would take it to £600.
Just multiply the total amount to pay by 0.8 to get the amount you need to put in (600 x 0.8 = 480).

Remember the top up is limited to £500 every 3 months but it doesn't look like you'll reach that if it's £600 a month.

I use mine like a savings account - I put every spare penny in there and just draw down monthly when the bill is due. I have about 6-9 months of money in there currently for my twins

If your childcare costs are stable throughout the year then you just need to do what '@BonesOfWhatYouBelieve has said.

If you'll need to pay more than this at some points then it's worth trying to get more, or all of the top-up every quarter so it's there when you need it.

Would you not be better off earning interest on that in the meantime?

Thank you!
omg i’m so mad with myself!! I kept putting off doing it and I can’t believe i’d have saved £120 on this months bill 😢😢😢
how quickly does the government do the top up after i have paid the money in? I usually get the invoice a few days maybe a week before the end of the month for the following month, and it has to be paid by the 1st of the month.

It should be very quick if your account is all set up, within hours, definitely same day I think.

You can get up to £500 every 3 months.

Thank you
i’ll definitely be using it going forward!

@Headabovetheparakeet

Savings accounts are hardly paying much interest to make it worth really. I make sure I get the full top up of £500 per quarter per child - I have twins so it's worth a lot of money to make sure I have enough saved every 3 months to get the full benefit of the top Up

I put the full amount in which is £465. The government does their top up. It's normally the same day or very next day. I then use the extra every 4ish months so I get a "free" month. So I will use that in December when we watch our money a little more. It feels like one less bill to pay🙈

@singlemomof3

Maybe your childcare costs are just much lower than mine. Nine months of nursery fees for my son would be more than £8k.

@Headabovetheparakeet
Twins so regularly £1800 per month for the 2 of them....

I took out a bank loan and also put all my savings into the account every quarter to ensure I get the £500 x 2 and means I have a buffer of several months into the future of childcare fees covered

Plus now going through a divorce and helps that as the money is in a named account for a specific cost relating to the children my solicitors has said STBEXH can't really claim it as a marital asset / wouldn't go down with the court

You can also withdraw the money you have put in if you need to so definately worth putting as much in as you can.

Thanks everyone
interesting about over paying, I hadn’t thought about that.
so if i pay £465 into it that means we get the full £500 each quarter? I’m abit sleep deprived atm so I can’t think straight 😂🙈🙈

The top up usually goes in overnight so is there the day after you pay in.

No, you need to pay in £2,000 per quarter to get the full £500, so about £666 per month. You personally don't need to get the full amount because your bills are less than this so you'd end up putting money in that wouldn't then be used. Although of course you can pay it in and save it up as a PP said, to give yourself a free month later on, but in terms of the top up you'll receive, it will end up the same.

My bill varies each month, but I can work out the yearly amount and then average it out, so that's the amount I pay in each month (by standing order, the day after payday, so I don't have to think about it) but I also put extra in to begin with so I always have surplus to cover the more expensive months.

It's really easy once you've set it all up.

Ah yes of course, i get you. It seems obvious now 🤣 I’ll just start of paying what i need to and then see how it goes. Just nice to get some help for towards the bill. I’ve just signed a petition for 30 hours free from age 1 where the parents are working. Its just stupid the costs 😢😢

@Bunny2607 I’ll sign the petition!
Very good advice on here.