TFC30800 | Childcare accounts: withdrawals from childcare accounts

Childcare Payments Act 2014, section 22

If an account holder makes a withdrawal from the childcare account, the corresponding top-up element of the withdrawal is returned to HMRC from the childcare account with only the remainder being available to the account holder.

As the corresponding top-up amount of any withdrawal must be paid to HMRC, the maximum amount which can be withdrawn from a childcare account is the ‘relevant percentage’ of the total amount in the account at any time. Where top-up payments are provided at the rate of 25% of a qualifying payment, the relevant percentage will be 80%. Therefore, a person may not withdraw more than 80% of the amount of money in a childcare account.

A person may not make a withdrawal from a childcare account when a top-up payment is payable into the account. This is to maintain the required ratio between account holder funds and Government top-up payments.

Example:

Raveena deposits £600 into her childcare account in her first three EPs totalling £1800. She receives a top up of £450 (25% of £1800). The total amount in her account is now £2,250. Raveena decides to withdraw her money from her childcare account. She receives her original amount of £1800 back into her bank account and the remaining 20% top up amount of £450 is retained by HMRC.