Government Funding

In the 2023 Spring budget the Government announced new working parent entitlements for children aged 9 months up to and including 2 years old to expand on the existing childcare support for 3 and 4 year olds.  This means that there will be funding to reduce your childcare costs from the end of your maternity leave until your child starts school. This will be rolled out in phases, please read the guidance below to support you. 

April 2024 sees the start of some significant changes to extend the existing 15 and 30 hours childcare support in England.  The expansion will be introduced in phases; by September 2025, most working families with children under the age of 5 will be entitled to 30 hours of childcare support.

The current offer

All parents/carers of 3 and 4-year-olds are entitled to 15 hours a week childcare support with registered childcare providers.

Eligible working parents and carers of children aged 3-4 can also get an additional 15 hours childcare support, bringing their total up to 30 hours a week.

Eligible parents of 2-year-old children may also be entitled to 15 hours childcare support if they receive some additional forms of government support.

The expansion

In addition to the current offer:

From April 2024, eligible working parents of 2-year-olds will be able to access 15 hours childcare support.

From September 2024, 15 hours childcare support will be extended to eligible working parents of children from the age of 9 months to 3-year-olds.

From September 2025, eligible working parents of children under the age of 5 will be entitled to 30 hours of childcare a week.

Is it really free?

The Government are investing over £400 million in 2024-2025.  The guidance refers to early years provision free of charge (sections 7 and 7A Childcare Act 2006) and free childcare for eligible working parents (section 2 Childcare Act 2016) as the ‘free entitlement(s)’, a ‘free place’ or ‘free hours’. However, as the funding rates do not fully meet the actual cost of providing childcare we often refer to this as funded hours or subsidised hours.

Every Local Authority (LA) has a funding rate set by the Department for Education (DfE) and this rate is variable across the different areas of the country. From this, local authorities retain some of this rate to fund some of the early years services they provide.  The pass-through rate to the childcare provider must be a minimum of 95% of government funding unless there is a specific exemption.   

Sadly, the hourly funding rate received by childcare providers is lower than they would usually charge and does not meet their running costs.  This obviously affects the sustainability of pre-schools, nurseries and childminders, so you may find that your childcare setting will ask you for a consumables contribution to cover things such as snacks, meals and outings. There will also be additional charges to top your 15 hours up, however you will still be able to use Tax-Free Childcare or Universal Credit for Childcare whilst claiming your 15 or 30 hours of childcare support.

Who can provide funded childcare hours?

  • any early years provider (such as a private day nursery, pre-school, childminder, childcare on domestic premises or school nursery) registered on the Ofsted Early Years Register
  • a childminder or childcare provider registered with a childminder agency which is itself registered with Ofsted
  • schools taking children age 2 and over which are exempt from registration with Ofsted as an early years provider

When will my funded childcare place start?

Funding will start the term after your child’s eligible birthday.  For example:

  • children born in the period 1 January to 31 March: the start of term beginning on or following 1 April after the child’s relevant birthday or date of turning 9 months old
  • children born in the period 1 April to 31 August: the start of term beginning on or following 1 September after the child’s relevant birthday or date of turning 9 months old
  • children born in the period 1 September to 31 December: the start of term beginning on or following 1 January after the child’s relevant birthday or date of turning 9 months old

The 15 and 30 hour funding is calculated over 38 weeks a year (term time only like in a school) so the funding will not cover your childcare all year round. 

Eligibility for working parents entitlements

A child is entitled to free/funded early years provision if the child has attained the relevant age, is under compulsory school age and the child’s parent(s) meets the eligibility criteria set out below:

  • the parent of the child (and their partner where applicable) should be seeking the free childcare to enable them to work
  • the parent of the child (and their partner where applicable) should also be in qualifying paid work. The definition of qualifying paid work is set out in regulations 16 and 17 of the 2022 Regulations, and the minimum income requirement is in regulation 18. Each parent or the single parent in a lone parent household will need to expect to earn the equivalent of 16 hours at the national minimum wage rate over the forthcoming quarter
  • where one or both parents are on certain forms of family leave from work (including maternity, paternity or shared parental leave) or in receipt of certain forms of statutory pay in connection with sickness or parenting, they are treated as though they meet the minimum income requirement. This will apply for the 31 days before they return to work for those parents on family leave in relation to the child in free childcare
  • where one parent (in a couple household) is in receipt or could be entitled to be in receipt of specific benefits related to caring, incapacity for work or limited capability for work that they are treated as though they are in paid work
  • where a parent is in a ‘start-up period’ (ie they are newly self-employed), they do not need to demonstrate that they meet the income criteria for 12 months in order to qualify for the working parent entitlement
  • if either or each parent’s income exceeds £100,000, they will not be eligible for the working parent entitlement

Children in foster care who have attained the Relevant Age are also eligible for the working parent entitlements, provided the foster parent is in paid work outside their fostering role, does not expect their adjusted net income to exceed £100,000 and the responsible local authority[footnote 15] confirms it is satisfied that the foster parent engaging in paid work, other than as a foster parent, is consistent with the child’s care plan. The foster parent does not have to meet the minimum income requirement.

When to apply

Currently, you can apply on-line from when your child is:

  • 1 year and 36 weeks for 15 hours free/funded childcare
  • 2 years and 36 weeks for 30 hours free/funded childcare

Your child’s birthday

When they can get their hours from

Recommended time to apply

1 September to 31 December

Term starting on or after 1 January

15 October to 30 November

1 January to 31 March

Term starting on or after 1 April

15 January to 28 February

1 April to 31 August

Term starting on or after 1 September

15 June to 31 July

It can take 20 minutes to apply. You may find out if you’re eligible straight away, but it can take up to 7 days.  Once your application has been approved, you’ll get a code for free childcare to give to your childcare provider.  You have to reconfirm your eligibility every 3 months. If you apply more than 3 months before the term starts, you’ll have to reconfirm your eligibility in your account in order to keep your code valid.

If you already have a tax free funding account you may have to wait until you reconfirm your information to apply for your code.  Please note that it may be beneficial to apply for a code in February as if you apply too early you may have to reconfirm your code before your funding starts at the beginning of the term.

We are still waiting for full confirmation of funding rates and working to finalise our offer details from April 2024, therefore we cannot currently provide you with all of the details of how you can use your funding entilement but we will update you as soon as possible. 

Please contact us if you have any further questions.