Another tax free childcare question

PeppaCoin

HI, just a quick one.

We have 2 kids - one in nursery, one in school (attending before and after school clubs).

We have found we will be better off switching from childcare vouchers to tax free childcare, as our bill is around £13k per year. However this is split pretty unevenly between the 2 children - £3k for the eldest and £10k for the youngest.

I keep reading you can save up to £2k per child, so does this mean we can save £4k off our £13k bill, or (im guessing this is more the reality), although we can save the full £2k for our youngest, we can only save a proportion of the £2k for our eldest child since his actual bill is much lower.

Any helpful advice? Thanks clever people.

Bean83

The basics of the tax-free childcare system is this:
For every 80p you pay in, the government adds 20p

Therefore, in effect you only end up paying 80% of your childcare costs, and the government pay the remainder. In your case, this would mean that you would now be paying 80% of £13k (£10,400) and the government would be paying 20% (£2600).

If you break it down individually for each child, it works out like this:
Child 1: 80% of £10k = £8k - saving £2000
Child 2: 80% of £3k = £2400 - saving £600

(Note that £2k is the absolute maximum you can get per child - if your bill for that child was more than £10k per year you would still only receive £2k from the government).

Beware though - I have been using the tax-free childcare system for about 2 months now, and its absolutely awful!! The website is horrendous and crashes all the time, and payments seem to take ages to clear. I notice the website is down yet again today, but it states it will be back at midday - I can only hope they have fixed some of the problems and it will become a bit more user-friendly!