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How to help your nursery business grow and support parents through the funding maze

13 min of reading
28 February 2022
Support parents through the funding maze
Table of Contents

    Let’s talk about the ‘f’ word. No, not that one. We’re talking about funding. It’s no secret that early year funding has and continues to be a tumultuous topic. With pleas and plans for increased government funding for childcare, it can be tricky for parents and providers who apply for nursery funding. So let’s discuss how you can support your parents before and during the process, how to organise your funding accurately for Ofsted, and how all this, in turn, actually boosts your nursery business’s own finances.

    Department of Education Funding

    The first step we’d encourage you to suggest to your parents is for them to seek out the funding options that they are entitled to. For 3-4 years olds there is Universal Funding and a possible extension of 15 hours, and for 2 year olds there is 15 hour funding. Let’s explore these options:

    Ages 3 & 4, Universal Funding for Childcare

    There are universal funding options that all 3-4 year olds have access to, with Universal 15 hours free childcare. For working parents who aren’t receiving Tax-Free Childcare (discussed below), you can suggest that this may be a route to explore. If they are eligible they’ll receive up to 85% of the childcare costs, up to a maximum monthly limit of £646.35 for one child and £1108.04 for 2 or more children. Work with your parents to help sort any proof that they may require from your setting, such as invoices, which will help them to make this claim successfully.

    Ages 3 & 4, 30 Hours Free Childcare

    Apart from the universal funding that all 3-4 year olds are entitled to, there is extended 15 hour funding available to parents as well- if they meet certain criteria. Eligibility depends on your parents’ work status (if they are working more than 30 hours per week), income (earning less than £100K p/a), their child, and their immigration status. Generally this option can get parents with 3 and 4 year old children 30 hours of free childcare- but only for 38 weeks (a total of 1,140 hours p/a) and not the entire year. These are the only funding options available to your parents under the Department of Education Funding for 3-4 year olds.

    Age 2, 15 Hours Free Childcare

    For parents who are living in England, and are receiving some form of support (e.g. Income Support), there is 15 hours free childcare funding available for their 2 year olds. Parents can also receive this support if they get a Disability Living Allowance or have children with SEN. That’s 15 hours free for 38 weeks, a total of 570 hours per year. This funding rate is much higher because of the age of the children. At the moment (February 2022) parents may receive £6 per hour.

    Top tip

    We’ve got all the funding links sorted for you. Why not send this article to your parents to have a look! Share the link.


    Early Year Funding for SEN and SEND

    The Disability Access Fund is an option to explore as an additional annual amount of £615 per child is paid directly to your setting. This is for children aged between 3 and 4 year old who receive free Early Years Education (Nursery Education Grant) and who receive a Disability Living Allowance.

    Insider Info!

    How has SENIF been impacted by the new EYFS 2021? When it comes to Development Matters, a ‘clear summative assessment of the child’s needs’ will be conducted instead of the previous data tracking requirements.

    Additionally, the Department of Education Funding also has options to provide funding to your setting as well. The Early Years Pupil Premium (EYPP) is another route, although it is not exclusive to your children with SEN or SEND. This additional funding is given to early years providers for some 3 and 4 year olds. You can claim an additional £300 p/a. It’s worth checking to see if your setting qualifies to apply.

    Insider tip!

    Updated national funding rates for 2022/2023 have been released: Early Years Pupil Premium will increase by 7p, from 53p to 60p per eligible child per hour. For the Disability Access Fund, it will increase by £185, from £615 to £800 per eligible child per year.

    Let’s explore other funding options for your parents…

    Department of Work and Pensions Funding

    However, there are alternative funding options available to your parents as well which are worth discussing. For example, if the parent is at college, then the Department of Work and Pensions may pay for their child’s fees at a nursery. But again, there are certain criteria that must be met. This includes that they must attend their classes 95% of the time. Also the entire fee may not be covered by this type of funding, commonly only 80-90% of the fees are paid and the remaining unpaid amount must come directly from the parent’s pocket. Remember, this funding gets paid directly to the parents, instead of to your setting.

    Top tip!

    Send funding reminders to parents automatically with Blossom and ensure that your setting receives its funding payments on time. Learn more.

    HMRC Funding Options

    Let’s explore further childcare funding options for your parents including the Tax-Free Childcare Scheme, Childcare Tax Credits, Working Tax Credits, and Universal Credit.

    The Tax-Free Childcare Scheme

    If parents haven’t already secured vouchers (before 2018), you can discuss the Tax-Free Childcare scheme with them. This government scheme is designed to support parents with their costs of childcare. Eligibility depends on work status, income, their child, and their immigration status. The support comes down to for every £8 parents pay into an online account, the government will add an extra £2, up to £2,000 per child per year.

    Important note!

    You cannot use Tax-Free Childcare at the same time as:

    Childcare Tax Credits

    Chat to your parents to see if they are already receiving Working Tax Credit, as without this, they will not qualify for Childcare Tax Credits. How much they’ll receive depends on whether they’re making a new claim for Child Tax Credit or if they’re already claiming Child Tax Credit.


    Remember to inform them that Child Tax Credit will not affect their Child Benefit!

    Working Tax Credits for childcare

    Although this is being replaced by the Universal Credit for Childcare, for now this may still be a viable option to discuss with your parents. They can only claim for Working Tax Credit if they are already getting Child Tax Credit. They can apply even if they’re on leave, about to start a new job, or are self-employed. This funding option provides up to £122.50 for 1 child, or £210 for 2 or more children a week.

    Universal Credit for Childcare

    You can discuss with your parents that they explore applying for Universal Credit. This is designed to support your parents with living costs – including childcare. This can help ease up to 85% of their childcare costs as, if they meet the criteria, they can receive up to £646.35 for one child and £1,108.04 for 2 or more children. Discuss with your parents to see if they are eligible.

    Get Parents’ Employers Involved

    Should these funding routes prove insufficient for your parents, why not encourage your parents to talk with their employer about funding options. If they have secured vouchers before 2018, then that can continue with no issue. But another option may be to have parents’ employers make direct payments to your setting.

    It’s not uncommon that certain companies have arranged deals with nurseries before. If fact, this could be an opportunity to, pardon the gruesome idiom, kill two birds with one stone. As by securing a deal with a company your childcare business can increase occupancy while your parents employed by them are given more childcare financial relief. You can even take it a step further and negotiate to open a branch of your nursery at the company’s premises itself.

    Protect and Accurately Record your Funding

    How can you record and manage all your funded nursery hours? You know what we’re going to say; put a nursery management software in place. It really helps to firstly, create any funding type you want for your setting, secondly to easily calculate each case’s funding, and thirdly to automatically deduct funding from parent invoices so you don’t go back and forth. All the while you are storing this sensitive data online and in a cloud-protected system.

    Talk to Parents About Claiming Help

    Your parents may or may not be aware of all the benefits that they are actually entitled to. Therefore, it’s worth hosting a social session to chat about all options that are available to them. Having this session over a cup of tea with other parents is a good way to start the conversation and in a social, less intimidating way. It’s also a great opportunity for parents to connect with each other on their personal experiences.

    What About My Non-EEA Parents with 2 Year Olds Who Cannot Claim Benefits?

    Inform your parents that there is still government help for childcare available to them. If they have children under 2 at your setting, parents may receive free childcare if they are getting support under the Immigration and Asylum Act. They would need to have either claimed asylum in the UK (and are possibly awaiting a decision), or have been refused asylum. Secondly, their 2 year old may get free childcare if the household income is £15,400 p/a or less after tax, as well as additional listed requirements.

    Preparing Funding for Parents Whose Children are Reaching ‘Big School’ Age

    Going to ‘big school’ can be more of an adjustment for the parents than the children sometimes. Therefore, understandably so, government funding for childcare may be at the top of parents’ concerns. Some of their funding options are going to change. Some may not. For example, their children would age out of the universal funding hours, but the Tax-Free Childcare, applies until 1 September after the child’s 11th birthday (or while they’re still under 17 if they are disabled).

    Funding for children with SEN and SEND can be provided up until their child is under 25, with termly reviews conducted by SEN Inclusion Fund. Therefore it is worth discussing continued funding options with your parents as this maintains your good relationship with them, for word of mouth marketing purposes, as well as if they should ever have more children to send to your setting!

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