Tax free childcare

[Ines91]

Hi
I'm looking for some information regarding the financial support I can get to put my baby in a nursery (as prices in London are unreal). Can someone tell me exactly how tax free childcare works? Do each of us (me and my partner) apply for this or only one of us?

Thanks in advance.

Its a joint application but its only one of you that sorts it. How I understand it for every £8 you put in the government gives £2 up to £2000 per year and you pay the nursery directly from that account.

One of you:

www.gov.uk/tax-free-childcare

You use this link and apply. You then pay money into the account, the govt add 20% up to £500 every 3 months and you can pay your childcare bill directly out of that. You need to reconfirm your eligibility every 3 months.

It’s really simple to use!

You can apply for as many children as you have.

Ok great, thanks both for your help!

When the time comes you can get your 30 free hours code through the same account too.

Hope you don't mind me hopping on to ask as I'm setting this us too, my childminder wants to be paid at the end of the month so I'll be paying the money in just before and setting up the payment to go out last day of the month-if the government pay the 20% every 3 months am I right in thinking you get it after you've paid your childcare bill, so would need to front the full cost initially?

This one is not means tested and can be claimed for child at any age.
Only one of you needs to claim. You can also use this to pay a childminder or nanny but they have to agree to this. It doesn't cost them anything.
For every £10. That you pay into the account the government will pay £2. So over the year this can add up.

@InpatientGardener I'm a cm but my parents tell me that the money has to be in the account overnight to get topped up before you can pay it out.

Once set up you make a payment from your bank account to the central childcare one with reference number on there to make sure it finds its way to 'your' account. Day or so later this will appear as a balance, with the extra 20% added on. This can then be sent to nominated childcare provider you have added in once you've managed to find them on the system. This can be done on an ad-hoc basis or set up as a regular payment.

Thank you both!

@notthemum

This one is not means tested and can be claimed for child at any age. Only one of you needs to claim. You can also use this to pay a childminder or nanny but they have to agree to this. It doesn't cost them anything. For every £10. That you pay into the account the government will pay £2. So over the year this can add up.

The government sells it as not means tested, but it’s not available if either parent earns over £100k

@notthemum

This one is not means tested and can be claimed for child at any age. Only one of you needs to claim. You can also use this to pay a childminder or nanny but they have to agree to this. It doesn't cost them anything. For every £10. That you pay into the account the government will pay £2. So over the year this can add up.

It is actually means tested, as if either parent earns over £100k, the family cannot access the 30 hours, and will only be entitled to the standard 15 hours.

@InpatientGardener

Hope you don't mind me hopping on to ask as I'm setting this us too, my childminder wants to be paid at the end of the month so I'll be paying the money in just before and setting up the payment to go out last day of the month-if the government pay the 20% every 3 months am I right in thinking you get it after you've paid your childcare bill, so would need to front the full cost initially?

The top up goes on about 24 hours after the money goes in so no massive lag time (thankfully!). Once you're set up it's all pretty quick and easy it's just a bit of a faff to get started. But our routine now is we get the nursery invoice M mid month, I work out how much we need to pay in and then let DP know what his half is. We then both send it through online banking on payday and in theory it's all ready to set up the payment to nursery by the end of the month. Nursery say they want paying on the last day of month but I'm sure most people don't top up til payday so we usually pay on 1st or 2nd of the month and so far that's been ok.

You can of course automate all this but we have a variable bill depending on the number of days so I do it all manually. DP has all the info but it's my account, effectively.

@InpatientGardener

Hope you don't mind me hopping on to ask as I'm setting this us too, my childminder wants to be paid at the end of the month so I'll be paying the money in just before and setting up the payment to go out last day of the month-if the government pay the 20% every 3 months am I right in thinking you get it after you've paid your childcare bill, so would need to front the full cost initially?

Nope, you pay your 80% into the account and the next day the government top it up by the extra 20%. The full payment is then paid to your childminder from that account.

No hassle with paying and then reclaiming!

From a provider point of view, don't wait until the due date to do it, it isn't an instant transfer so your payment will end up being late.

Starseeking and CaptainWentworth.
Let me check out all my paperwork and I will get back to you Thursday or Friday if thats any use to you ?

@notthemum This is from the gov.uk website.

The bottom of the third page tells you about the income limits.

It definitely still applies, as I've had to pay through the nose for childcare while holding down a full-time job, and I have two under 5!

Oh yes, it is definitely means tested!

As you say, childcare prices are unreal. I'm not in London but mine are over £1,200/month for full time nursery (other local ones go up to £1,700), so you have my sympathy.

I know you asked about tax free childcare, and other PP have given you fab advice. Mine is to look at universal credit. I have no idea how much you earn, but I am on around £40k and am eligible for universal credit for the childcare element of it, which (for me) is around £4k/year, which is double the mac amount tax free childcare will stretch to. Obviously, it also depends on savings etc as if you have over £16k in savings, you'll get nothing from universal credit, but it could be worth looking into. At the prices childcare come to, the £2k max discount from the tax free childcare barely touches the sides (I've used up my £500/quarter in less than 2 months!).

@Starseeking.
Have recently given up childminding having done it for almost 20 years. So was therefore around when a lot of these things came in and as in line with certain rules kept all the paperwork. I didn't come on for a row or what sounded like a snotty message telling me i didn't know what I was talking about. I came to trý to help anyone who was interested in a vast amount of knowledge regarding ssid paperwork and experience.
Best wishes

@notthemum

I didn't come on for a row or what sounded like a snotty message telling me I didn't know what I was talking about.

Well this is a first on MN for me! I never intended any of my posts to come across that way, and can't really see how they did to be honest. Perhaps you meant to quote another PP?

All I thought I was doing was sharing my current experience of not qualifying due to income level, as well as linking to the gov.uk which gives the factual guidance.

Hi

Really confused by this whole tax free childcare thing...

So do I have to pay tax and then the government gives me back £2000?

So for instance I have a nanny who says they want to be paid £340 a week gross for 4 days work (basically at £10 an hour).

So for a whole year that would be like £1,483 a month.

But then I have seen on a nanny tax calculator that after tax, NI and pension payments I will pay something more like: £1,888.38

Do I pay £1,888.38 and then the government gives me back £2 for every £8 of that figure?

Or do I pay no tax (i.e £1,483) and then the government pays me £2 for every £8 of that figure.

Praying its the last one but not that hopeful.

Any help would be great!!!

@williamnott

Hi

Really confused by this whole tax free childcare thing...

So do I have to pay tax and then the government gives me back £2000?

So for instance I have a nanny who says they want to be paid £340 a week gross for 4 days work (basically at £10 an hour).

So for a whole year that would be like £1,483 a month.

But then I have seen on a nanny tax calculator that after tax, NI and pension payments I will pay something more like: £1,888.38

Do I pay £1,888.38 and then the government gives me back £2 for every £8 of that figure?

Or do I pay no tax (i.e £1,483) and then the government pays me £2 for every £8 of that figure.

Praying its the last one but not that hopeful.

Any help would be great!!!

You pay the tax as usual. You then pay in to a childcare account and the government top it up, which is the equivalent of getting your tax back.

BUT you are limited to getting £2k a year, by paying in £8k, so you won’t get the top up for the full amount. You’ll get a £2k a year discount essentially.

Also, as above, if either parent earns over 100k, you don’t qualify.

You have a childcare tax account which is like a bank account and from that account you can only pay a registered nursery / childminder.

I pay money in at the end of the month (today!) then the government top it up a bit and out of the account I transfer the fees to nursery.

It is a bit of a faff to set up but then it's quite easy from there.

I need help with my Tax-Free Childcare - any mums on here that can help PLEASE?!