Someone please explain funded childcare

[InsideOut91]

I’ve worked in nurseries for years and this is what I’ve known about government funded childcare:
if you are eligible then you apply online and receive a code, you give the code to your childcare provider who uses it to claim your funded hours.

so now I’ve come to apply for my two year old, I have applied successfully and obtained the correct information.

However I am now really confused as I now see you receive a childcare account with an account number and sort code, and access to pay into the account. I have no idea how this works at all, currently there is nothing in the account and DDs funding won’t begin until April, but I don’t understand how to use this. I always got the impression that the childcare provider claimed the funding, but this seems more like I pay them from this account.
please can someone explain this.

I think those are two separate things- the account you log into is the tax free childcare. You put in 2k and get 500 quid free, something like that. The free hours is a separate thing that the provider claims and is like an automatic discount.

You need the account to claim Tax Free Childcare, but you also get the code for the funded hours through the account. You then give the code to the nursery and then they sort it all out at their end - it's not a system where you pay and then claim the money back, fortunately!

You pay into the account and the Government top it up by 20%. You then use this account to pay the childcare bill.

BTW, your nursery will probably still charge a small fee for "expenses" for the free days your child attends. Make sure you use the tax free childcare account to pay for this (unless you get the childcare component of Universal Credit) - it's a 20% discount essentially!

1. Nursery uses your code to confirmed your reduced bill based on the free hours (15/30 ‘free’ hours) (Eg. £650/month)
2. You pay money into your tax free childcare account from your bank account (£520)
3. Gov tops up your payment to £650. Note, top up limited to £167/month.
4. You transfer topped up money to your nursery from the tax free childcare account

Never knew that with my 1st! We paid the extra top up for his preschool year!

So there's two things here funded and unfunded hours and then how the gov child care account works

My daughter is 3 and gets 30 funded hours a week this started the term after she turned 3. She was 3 over the summer so hers started in September. She does 4 10h days a nursery so she has 1 unfunded day and 3 funded days a week. There are admin and food costs still on the funded hours and on those days we pay about 20% of an unfunded day. Our nursery charges for the number of funded and unfunded days in the month as you only get it during term time. Some nurseries pro rata (average) it out over the year so it's always the same amount

The government childcare account is how the government give you your tax back on money spent on child care. If you put in £100 the government adds I think £20 but it might be £25 I can't remember if it's the same as pensions or not. You get a maximum of £500 every 3 months from the government. You then pay the nursery from this account. You can either do it month by month or if it is the same amount every time you can set it to go out every month. You pay into the account my bank transfer or standing order like you would any normal bank account. It can take a day or two for the government to pay the top up so make sure to factor this in when paying the nursery