Tax free childcare - can anyone explain it?

[Gigi89x]

Can anyone help explain how to work out how much to pay into the government tax free childcare account each month? From my own account

The gov pays in a certain amount and I'm not sure how to work it all out!

Anyone able to help?

Sorry. I was right the first time.

Take your nursery bill. Divide it by 5. Minus that amount from your total bill. That's how much you need to pay in to your tax free childcare account.

So for example, your nursery bill is £1000 ÷ 5 = £200
£1000 - £200 = £800 - that's what you put in to your tax free childcare account.

@NigelTheCrab sorry if i'm being thick😂, but what does the 5 signify/where did you find this?

The gov site says

You can get up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare.

Whatever your nursery fees are per month multiply by 0.8. That’s the amount you have to put into the tax free childcare account.

Just pay in 80% of your total nursery bill.
Eg nursery bill £150 a week
0.8x150 is 120
So if you pay in 120 to your TFC account, the government will top it up to 150 and you pay nursery from that account.

5 signifies 20% which the Government pays. It's easier to multiply by 0.8 though and thats the amount you pay in.

@Gigi89x the 5 is because the government will pay 20% of the bill, which is one fifth. So you divide your whole bill into 5, and then multiply by 4 which gives you 80% - that's the amount you must put in.

However you're right that they will only do this up to 500 every 3 months, so in reality it's not really 20% off your whole nursery bill, it's only 20% off until they've paid 500 every 3 months. So in every 3 month period you need to keep a track of how much they have given you, and then when you reach the £500 limit from the government, you'll then have to pay the whole bill until it resets every 3 months.

Had never thought of multiplying by 0.8 before! Lols! So simple 🤦‍♀️😂

For every £80 you pay into your account the government tops it up to £100. Up to a maximum of £500 every 3months

If you pay in £800 in months 1 and 2 the government will top them both up to £1000 but in month 3 there is only £100 left of the allowance so it only goes up to £900. In month 4 you restart.

FYI this is also how the tax relief on your pension works so if you are paying into a work place pension for each £80 you pay in the government tops it up to £100 for 20% tax payers

As others have said times your nursery bill by 0.8 to find out how much is left for you to cover. If your bill is £1000 you pay in £800 and for the first two months it will get topped up to £1000. But for month 3 you'll only have £100 left to be topped up so you'll have to pay in £900.

Then for month 4 it resets and you have £500 again.

Thanks all!!

How did you manage this along with the 15 hours free funding? I'm so confused as I seem to be eligible for tax free childcare and the 15 hours for my 1 year old......

You can use both together.

Your nursery invoice will deduct the “free” hours. Then you just pay in 80% of the actual bill nursery gives you.

Really useful link here to calculate the tax free childcare. As long as you have your invoice from nursery you can input the amount into the 'total amount payable' and it will work it out for you 👍🏻

taxfreechildcarecalculator.com/

For every £8 you pay into your childcare account, the government adds £2, covering up to £500 every three months per child (£1,000 if the child is disabled), with an annual maximum of £2,000 per child (£4,000 for disabled children). To calculate how much to pay in, figure out your total monthly childcare costs, then divide that amount by 0.8 to account for the government’s 20% contribution. For example, if your childcare costs are £600 a month, you’d pay £480 from your account, and the government would add £120. Alternatively there are some online calculators available to calculate the contributions by government and your self in accordance with the cost of childcare.

I think, To figure out how much to pay into the government's Tax-Free Childcare account, you need to contribute 80% of the total cost of childcare. For every £8 you pay in, the government will add £2, up to a maximum of £500 per child every 3 months (£1,000 if your child has a disability).
So, work out your monthly childcare costs, then calculate 80% of that amount. That’s how much you need to pay, and the government will add the 20%.

The best way to check calculate is using this Online calculator.