Childcare govt top up - how does it work?

[Hotyogahotchoc]

How does this work?

I understand the govt will put in £2 for every £8 but how does this work in practice?

If nursery fees were £1000 per month I would just put in £800 and the rest would be topped up? Do I just put it in the account and then get a top up and pay it to the nursery or do I just pay £800 to the nursery and then it is topped up?

What if fees are £1130 a month?

And the top up is only £500 a month

So I need to pay (£1130 x 3) - £500 for three months?

So £2890 per 3 months is £963 a month and is that how much I put in the account for the date fees are due?

It's hardly £2 for every £8 if it's limited to £500 (which i have wonky just seen!)

You put it into the childcare account. The government top it up in that account then you pay the childcare provider from that account.

There will be a reference number you give the nursery.

And you have to confirm every 3 months that you are still eligible.

The £500 top up is quarterly, not monthly. It’s a max of 2k a year

4 days would be 930 so this x 3 months - 500 = £2290

then divide by 3 = £763 per month

Baby due to start nursery in May

Not 100 per cent sure if it will be 5 days or 4 days but likely 5

Also some months will be shorter and longer than others and you might not pay for bank holidays etc.

Sorry yes I meant £500 every 3 months

That's what I've calculated - (gross fees x 3 months) - £500 is what I will pay

Then divided that by 3 and that's what I put in the account?

I just look for tax free childcare calculator online and use that tbh

It may not be as simple as your calculations, you’ll need to ask nursery how they do their billing. DS1 nursery did weekly fee * 51 weeks/12 to get your set monthly figure (they were closed over Xmas so only charged 51 weeks instead of 52) DS2 nursery charge based on weeks in the month so some months is 4 weeks and some are 5 (it’s a bloody nuisance)

@KiloWhat

You put it into the childcare account. The government top it up in that account then you pay the childcare provider from that account.

There will be a reference number you give the nursery.

Thank you

So is there a timing issue ie say my fees are due the 1st of the month, can I just put my amount minus top up in the account that day or the day before it need time to be topped up

Also I assumed the fees would be the same every month as if have a price sheet setting out the monthly fees

But then how does that work at Christmas etc?

If your fees are £1130 per month you would pay 80% of that into your account, the government top it up and you then pay the nursery with it

Just deduct 20% from each months full payment amount, transfer that to the childcare account and the government top up to the full amount due.

You can put the money in whenever you like. And you can withdraw it if it builds up too much. I like to put the exact amount in each month but I know others like to use a standing order/direct debit

Also I assumed the fees would be the same every month as if have a price sheet setting out the monthly fees

But then how does that work at Christmas etc?

This depends on your nursery really. Mine charges per day.

@CloseYourMouthLynn

Just deduct 20% from each months full payment amount, transfer that to the childcare account and the government top up to the full amount due.

Careful doing this as you only get £500 from the government

Your nursery will have their own way of calculating fees
Where I work each month is the same as it’s worked out at days booked x 52 divided by 12

The day you need to transfer will be different each month and you need to allow sufficient clearance time. So for example, put your amount in on the 26th, government top up is 1-2 days later, then set it to transfer to the nursery the next day and in time for their deadline. Adjust for shorter/longer months.
Sounds more complicated than it is!

(it’s a bloody nuisance) aye that it is!

The top up is usually within a few hours if you pay in by bank transfer (longer if you pay in with debit card).

The payment to the provider can take a while sometimes though. I have to send my payment a few working days before it is due.

If your fees are £1130 per month you would pay 80% of that into your account, the government top it up and you then pay the nursery with it

Just deduct 20% from each months full payment amount, transfer that to the childcare account and the government top up to the full amount due.

But I don't think that's right is it because 20% of that amount over 3 months would be more than £500 so I don't think we'll get a full 20%

We will be paying more than 80%I am guessing

It may not be as simple as your calculations, you’ll need to ask nursery how they do their billing

Few sheet says calendar monthly rate = daily rate x number of days per week x 12 / 51 so I think that's the same? And then it says monthly rate for 5 days is £1130

@insancerre

If your fees are £1130 per month you would pay 80% of that into your account, the government top it up and you then pay the nursery with it

Not really as you get a max 2k top up per year so effectively only get tax free amount on the first 10k of fees.

To the OP, you're on the right lines with your calc of fees lessons per quarter but as others have said, check how nursery do the billing and may need to give a couple of days for payments to clear in account.

I may be remembering wrong but I think you can set up the tax free childcare account 2 months before you need it which would allow you to pre-pay in for 2 months before you need it and get that extra government top up if that makes sense. Obviously only if cash allows (appreciate that's hard at end of maternity leave) but I did that as nursery bill higher than 10k per year so wanted to maximise the tax free top ups as much as possible.

I may be remembering wrong but I think you can set up the tax free childcare account 2 months before you need it ooh yes it does let you pay in a bit before. Very handy if you can afford to.

So my fees are 1677 a month. With the top up only being 500 every 3 months it works out as having to pay the nursery a different fee every month on a 3 month rotation.

To prevent that from happening I have just averaged it out so that I pay in the same amount a month - so sometimes overpaying. So that I don't have to keep changing my standing order - very annoying.

Then have to go in and transfer the money from them to the nursery it's all a bit of a faff really.

Our nursery fees are £1163.50 per month, so the way I work it out is the max top up of £500/quarter is £166.66 per month. £1163.30 minus £166.66 equals £996.84. So that's what I pay into my TFC account each month (I actually round up to £1000, just for ease).

For timings, you need to allow a couple of days between each transaction, so if your fees are due by the first of the month, you'd want to transfer your payment no later than say the 26th, the government top up would be by approx the 28th and then you'd set up a payment (either manually each month or on a schedule) to go to nursery which can also take a couple of days. Obviously this will vary slightly depending on where the weekend falls and the length of the month.

I may be remembering wrong but I think you can set up the tax free childcare account 2 months before you need it which would allow you to pre-pay in for 2 months before you need it and get that extra government top up if that makes sense. Obviously only if cash allows (appreciate that's hard at end of maternity leave) but I did that as nursery bill higher than 10k per year so wanted to maximise the tax free top ups as much as possible.

Yes I think I know what you mean

I'm on statutory pay now so not much left for nursery fees but could do it from savings potentially if it will save us a few hundred ££

Our nursery fees are £1163.50 per month, so the way I work it out is the max top up of £500/quarter is £166.66 per month. £1163.30 minus £166.66 equals £996.84

I think this makes more sense than how I have done it