What Nurseries Can and Cannot Charge for in England
Under the Department for Education’s (DfE) statutory guidance, government-funded childcare hours must be completely free at the point of delivery. However, because government funding rates often fall short of actual nursery running costs, many settings rely on additional charges to survive.
To protect parents from hidden fees while keeping nurseries sustainable, the DfE enforces strict rules on what can be charged, what cannot, and how funded hours can legally be structured.
1. What Nurseries CAN Charge For (Voluntary Extras)
Government funding is strictly intended to cover the cost of delivering high-quality, flexible childcare. It is not intended to cover the "extras".
Nurseries are legally allowed to charge for:
Meals and Snacks: Breakfast, lunch, tea, and snacks provided by the nursery.
Physical Consumables: Items actually used by the child, such as nappies, wet wipes, and sun cream.
Optional Enrichment Activities: Specialist sessions that fall outside the standard Early Years Foundation Stage (EYFS) curriculum—such as French classes, external music tutors, or forest school sessions.
Trips and Outings: The cost of transport or entry tickets for local excursions.
Additional Private Hours: Any extra hours you book outside your standard 15- or 30-hour entitlement.
Refundable Deposits: Settings may charge a reasonable deposit to secure a funded place, but this must be fully refunded to you within a reasonable period after your child starts.
TLDR: All of the charges above must be entirely voluntary. If you choose not to pay them, the nursery cannot refuse you a funded place. They must offer you an alternative, such as allowing you to bring in your own packed lunch, nappies, or sun cream.
2. What Nurseries CANNOT Charge For
By law, nurseries cannot charge any mandatory fees that act as a barrier to accessing "free" hours.
The following charges are strictly prohibited:
Top-Up Fees
A "top-up fee" is when a nursery charges you the difference between their normal private hourly rate and the hourly funding rate they receive from the local authority. For example, if their private rate is £8/hour and the government pays them £6/hour, they cannot legally charge you a mandatory £2 "top-up" to bridge the gap.
Essential Core Learning Materials
A nursery cannot charge you for the basic resources required to deliver the EYFS curriculum. This includes:
Paper, crayons, and paint
Toys and books
General learning equipment
Core Business Operating Costs
You cannot be charged to cover the basic costs of running a business. Examples of illegal fees include:
"Sustainability," "utility," or "energy" surcharges
Fees to cover staff wages, training, or maintaining legal staff-to-child ratios
Administration or registration fees as a condition of taking up a funded place
Online system fees (e.g., charging you to access learning journals or digital registers)
3. How Nurseries Can & Cannot Enforce Funded Hours
How Nurseries ARE Allowed to Structure Funded Hours
To manage their schedules and keep their businesses viable, nurseries have a significant amount of control over when and how funded hours are delivered:
Setting Specific Funded Sessions: A nursery does not have to let you use your 15 or 30 hours whenever you want. They can restrict funded places to specific time blocks (e.g., 9:00 AM to 12:00 PM, or 1:00 PM to 4:00 PM).
Capping Funded Places: Nurseries can limit the total number of funded places they offer to protect their overall financial stability, provided they do so fairly.
Offering "Stretched" Funding: The standard funding covers 38 weeks of the school year. Nurseries are allowed to "stretch" this over 51 or 52 weeks (meaning you get fewer hours per week, but spread out across the whole year).
How Nurseries ARE NOT Allowed to Enforce Funded Hours
Some common practices used by settings to bypass funding rules are explicitly banned:
Making Private Hours Mandatory: A nursery cannot tell you that you can only have 15 free hours if you also pay for 10 private hours. Accessing your funded hours cannot be conditional on buying extra time.
The "Fully Free" Loophole: Nurseries cannot designate a tiny handful of "fully free" places for low-income families while imposing mandatory extra charges on all other "funded" places. Every funded place must be accessible without mandatory charges.
Charging an Hourly Rate for Extras: Any voluntary consumables fee must be charged per session, day, week, or term. They cannot charge a sneaky hourly rate (e.g., "£1.50 per hour for consumables") because this acts as a disguised top-up fee.
4. The Rules on Transparency and Invoices
To prevent hidden or bundled fees, the DfE enforces strict billing rules.
Clear Pricing: Childcare providers (excluding small childminders) must clearly publish all extra charges on their websites.
Itemised Invoices: By law, your invoice cannot simply show a lump sum of "extras." It must be fully itemised and split into distinct categories:
Free entitlement hours (clearly marked as free/funded)
Additional private paid hours
Food charges
Non-food consumables charges
Activities/enrichment charges
If a nursery fails to provide this breakdown, or if they threaten to withdraw your child's funded place because you refuse to pay a "voluntary" charge, you have the right to challenge them. Your first step should be to request their written admissions and charging policy. If the issue isn't resolved, you can escalate the matter directly to your local authority's Early Years Funding team.
5. Waiting List Fees
When a nursery has no immediate spaces and places your child on a waiting list, they often ask for a "waiting list fee" or "registration fee" to cover admin.
What is NOT allowed: A nursery cannot charge you a non-refundable waiting list or registration fee if you are only applying for your government-funded hours. Doing so violates the statutory requirement that the funded hours must be completely free at the point of access.
What IS allowed: If you are booking a mix of funded hours and privately paid hours (e.g., you want 30 funded hours plus 10 private hours), the nursery can legally charge you their standard non-refundable registration/waiting list fee, as private hours fall outside DfE regulations.
6. Holding Fees (Retainers)
A "holding fee" is charged to keep a specific start-date or slot secure before your child actually starts attending.
What is NOT allowed: A nursery cannot charge you a non-refundable "holding fee" or "retainer" to keep a fully funded place open for your child. They cannot say, "Pay £50 a month to keep this funded September space secured."
What IS allowed: Again, if you are reserving private, unpaid hours on top of your funding, they can charge a retainer or holding fee for those specific non-funded hours.
7. Deposits (Refundable vs. Non-Refundable)
Many nurseries ask for a lump sum (often £100 to £500) when you formally accept an offered place to ensure you don't "double-book" with multiple settings.
What is NOT allowed: A nursery strictly cannot charge a non-refundable deposit to secure a funded place.
What IS allowed: A nursery can charge a refundable deposit to secure a funded place. This is a legal mechanism designed to prevent parents from registering at three different nurseries and failing to show up on day one.
The "When" and "How" of Refunds: If a nursery charges you a refundable deposit to secure a funded place, they must refund it to you. DfE guidance and local authority rules state this refund must happen promptly—usually once the "headcount" or initial funding data has been submitted to the local authority (typically within the first term or 6 weeks of your child starting).
Important Caveat: If you pay a refundable deposit but then decide not to take the place and withdraw before your child's start date, the nursery is generally legally allowed to keep the deposit to cover their loss of business.
If a nursery insists on a non-refundable registration fee or refuses to outline when your deposit will be refunded for a funded place, they are in breach of their local authority provider agreement. Your first step should be to point them to the DfE Early Education and Childcare Statutory Guidance and request a copy of their admissions policy.
Phew! That’s a lotta rules - got more questions? Join our membership for 1-1 support calls.
There are two main schemes designed to help you manage childcare costs in the UK: funded childcare hours and Tax-Free Childcare.
In England, working parents can access up to 30 hours of funded childcare starting from when their child is just 9 months old, a benefit that can save families up to £8,000 a year. When combined with the Tax-Free Childcare scheme, these initiatives can slash your monthly expenses by hundreds of pounds.
However, getting there isn't always simple. There are strict eligibility criteria to navigate, crucial application deadlines to meet, and varying rules depending on whether you live in England, Scotland, Wales, or Northern Ireland.
What We’ll Cover in This 1-Hour Masterclass:
Who qualifies for funded hours and Tax-Free Childcare in the UK.
What adjusted net income means and how to calculate it.
How and when to apply for both schemes to avoid missing deadlines.
What happens to your childcare benefits during maternity leave or redundancy.
How Universal Credit interacts with funded hours.
The logistics of hiring a nanny and transitioning your child into care.
How to use the Workplace Nursery Benefit to slash your fees by 40%.
⚠️Is this session right for you? Please note that this masterclass is tailored for those earning under £100k due to specific scheme caps. If your income is £100k+, this particular session won't be suitable—but we’ve got you covered! You might find our previous session with wealth manager & financial coach Philly Ponniah much more relevant.
