Accounts, payroll and funding planning for day nurseries in England, with the cost of each funded hour set against the rate your council pays.
DfE's national average hourly rates paid to councils for 2026/27. Your council sets the rate it pays you.
2025/26 rate £11.56
2025/26 rate £8.54
2025/26 rate £6.12
Working parents' 30 hours a week are 1,140 hours a year over no fewer than 38 weeks. A nursery open 51 weeks a year can spread them at 22.35 hours a week.
570 hours
The universal entitlement for 3 and 4-year-olds, over the same 38 weeks.
Working parents in England have been able to claim 30 funded hours a week from the age of 9 months since September 2025. To qualify, each parent must earn at least the minimum wage for 16 hours a week, and neither can have adjusted net income over £100,000.
Councils add the Early Years Pupil Premium of at least £1.15 an hour on the first 15 hours for eligible children, and the Disability Access Fund of at least £975 a child a year.
The statutory guidance in force from 1 April 2026 says funded hours are free of charge and rules out top-up fees. Meals, consumables and extra activities can be charged only if the charges are voluntary for the parent, parents must be able to opt out, and invoices and receipts should be itemised. Any shortfall between your funded rate and your cost per hour has to be covered by paid hours, voluntary charges or lower costs.
Childcare from an Ofsted-registered nursery is exempt from VAT. HMRC's welfare manual lists drinks, picture books, crayons and toys provided to children in nurseries as goods supplied with the exempt welfare service. VAT Notice 701/2 paragraph 3.4 says goods that can be separated from the care are not covered by the exemption.
Early years provision on non-domestic premises has to be registered with Ofsted under section 34 of the Childcare Act 2006, where a child is looked after for 2 hours or more a day. Ofsted counted 27,900 nurseries and other providers on non-domestic premises at 31 March 2026, with about 1.16 million places.
Yes, when the nursery is registered with Ofsted. HMRC's VAT Education manual (VATEDU36900) treats childcare from an Ofsted-registered provider as an exempt supply of welfare services. A provider is not state-regulated while its application is still under consideration.
No. Funded hours must be free of charge to parents. Meals, consumables and extras can be charged only if the charges are voluntary for the parent, and invoices should be itemised.
At least 97% of its early years funding for 2026/27. The rate each provider receives is set by its council and shown on the council's funding letter.
Yes, if the nursery is signed up to Tax-Free Childcare. The government adds £2 for every £8 a parent pays in, up to £2,000 a year for each child, or £4,000 for a disabled child.
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