Tax-Free childcare account query for child on DLA

[Applecidercake]

Dear mumsnetters,

I was wondering if someone could assist me with a query in relation to a my Tax-Free childcare account for my DD who is on DLA?

The standards rate for the Tax-Free account is: Up to £500 every 3 months (up to £2,000 a year).
The enhanced rate for a child on DLA: Up to £1,000 every 3 months ( up to £4,000 a year).

It was only last week that I learned that I am entitled to the enhanced rate. I called the Tax-Free Childcare team and was surprised when I was advised that I am on the enhanced rate already.

My problem is that I don’t know how much I have to pay into my Tax-Free account every month to receive the maximum amount in top ups I’m entitled to.

The monthly nursery fee is £ 703.50.

As said, over the past year I was unaware that I am on the higher rate. I have therefore been paying £562.20 monthly, and have been receiving a top up of £141.30 which adds up to the nursery fee of £703.50.

I got this monthly figure from the official Tax-Free childcare calculator I use.

However, when you break this down, you’ll see that I am getting £2.00 for every £8.00 I paid into the account which is the standard rate.

I worked out that I should be paying

£ 370.00 into the Tax-Free free childcare account and be receiving a top up of £333.00 to achieve the £704.50 monthly fee. Is this correct?

Could someone advise where I go wrong or how the top ups are calculated?

Sorry for the long post but I couldn't explain it with fewer words!

You have misunderstood what changes with DLA. Even when DC gets DLA you still get a £2 top up for every £8 you pay. That isn’t what increases when in receipt of DLA. It is the limit each year that increases from £2k to £4k.

Your childcare costs aren’t enough to benefit from the increased limit.

To give you an example:
Someone with childcare costs of £1k per month would need to pay £800 to receive a top up of £200. Giving a yearly amount of £2400. This would be possible for a child with DLA. For one without DLA the yearly amount is capped at £2000.

Thanks for your reply and the explanation!

I completely misunderstood it and it makes sense now.