Tax free childcare maths. How do you spread it over the year?

[sellotape12]

Hello, I know the government gives you a maximum of £500 total, every three months. Do you have a calculation for how much you then use from it to pay your nursery bill, for bills that are over that amount? I’d like to know I’m paying the same amount each month. Our nursery bill is £950 monthly. Don’t want to accidentally end up using the entire £500 in one go, then be paying fluctuating amounts to nursery.

I’m sorry, it must be something divided by 12 but think I’m being thick. Any tips appreciated!

For every £4 you put in the government tops up £1 up to a maximum of £500 a quarter. If you don't use the full £500 in 3 months you lose that entitlement.
To get the full quota you would have to put in £666 a month giving a total of £800 so you would need to put in an extra £120 (£786). If you did this in month 1 you would get £196.50 from the gov so your balance after paying month one would be £32.50. If you put in £786 in month 2 you would get another £204 from gov and after paying month 2 you would be left with £65 in the account. If you put in £786 in month 3 you would only be entitled to £107.5 from the gov giving you £958 and £8 left when you have paid monthly 3.

Do double check my sums but something like this should allow you to have a regular amount to pay in and not leave yourself short and paying more on month 3 of the £500 entitlement

The government will top up max £2k per annum. So you can put in £8k (£2k per quarter) and they will top up £500 per quarter.

If you want to top up evenly I'd do this:

£950 x 12 = £11,400

Less £10k = £1400/ 12 = £116.66

So pay in £(2000/3) 666.67+ 116.66 = £783.33 per month

Hopefully that makes sense and I've done it right.

I'm not sure what you mean. You have to set up an account on the tax free childcare website. You pay money in, they add the money into the same account, then you set up a payment from the taxfree childcare account. The extra money doesn't hit your bank account or go to the nursery directly. You are always in control of what amount will be paid.

The £500 is a cap per quarter but it's £2 for every £8 you pay in. If you want to keep your payments the same, on your figures, you could do something like?

Month 1 - you pay in £800, govt pays in £200, you pay nursery £950, leave £50 in the account
Month 2 - same as above but you now have £100 left in the account (£50 from last month, £50 from this month)
Month 3 - you pay in £800, govt pays in £100 (£500 allowance minus £400 already paid), you use the excess from the previous two months for the balance and you pay nursery £950, leave £50 in the account

You can withdraw the extra at any time if you want to, or you can just reduce the amount you put in or what I do is keep the extra in the taxfree account and let it build up so periodically I can put a lower amount in.

Oh x-cross with pps who have calculated the maths more precisely than I have done! 🙈

Thanks @Shesellsseashellsontheseasure that’s what I meant. It’s because the government does it every quarter but the nursery bills every month. So I guess

(nursery bill £) X 12 months
–£2000
then / by 12

?

The government allocates the allowance per quarter but it's applied as soon as you pay the money in, however much you pay in up to the maximum amount. My nursery bill never went over £800 in a month so I just used to multiply whatever the invoice was by 0.8 and pay that amount in. Bear in mind that you can only draw back out what you have put in. If there is an amount of 'top up' left over, they won't let you withdraw it to your bank account, it can only be used to pay a childcare bill from the account.