A headline hourly rate does not tell you what nursery will cost each month. The useful number is a written quote for the days, hours and weeks your child will attend, with support and extra costs shown separately.
Ask for the bill before building the budget
- Ask for the price of the exact attendance pattern you want, including any minimum-session requirements.
- Ask how the provider applies funded hours across the year and how this affects monthly invoices.
- Ask for meals, consumables, activities, additional hours and any deposit or registration charges to be listed separately.
- Keep one-off charges separate from recurring monthly costs.
Those questions are a budgeting checklist, not a claim that every nursery charges every fee. GOV.UK says you may have to pay extra costs, including meals, nappies and activities, and advises asking your provider what you will pay.
Funded hours in England are not a cash allowance
Eligible working parents in England can get 30 funded hours a week for 38 weeks a year for children aged nine months to four years. Eligibility, the child's age and term-start dates matter. Do not subtract 30 hours from every week of a year without checking the provider's schedule.
England's universal entitlement for three- and four-year-olds is separate: 570 hours a year, usually taken as 15 hours a week for 38 weeks. A provider may offer fewer weekly hours over more weeks. Other UK nations have different funded-childcare provision.
Tax-Free Childcare is a separate account top-up
If eligible, for every £8 you pay into a Tax-Free Childcare account, the government adds £2. The usual top-up limit is £500 every three months per child, up to £2,000 a year. Higher limits apply for a disabled child. It is not an uncapped 20% reduction to every bill.
You can use Tax-Free Childcare alongside funded childcare if you qualify for both. Check the provider can receive payments through the scheme. Tax-Free Childcare cannot be received at the same time as certain other support, including Universal Credit, tax credits or childcare vouchers.
Work out your payment, not just the top-up percentage
The government adds 25% of the amount you deposit, which is 20% of the final amount available to pay the provider, while you have top-up allowance left. For an eligible £1,000 bill, £800 from you plus £200 from the government makes £1,000. Paying the entire £1,000 in yourself would produce a £250 top-up if allowance remains; it is not necessary just to cover that bill.
The quarterly cap can change the third month
Take an invented example with three eligible £1,000 invoices in one three-month eligibility period, no opening account balance and the usual £500 top-up limit. In month one, you pay £800 and receive £200. Repeat in month two. Only £100 of top-up remains for month three: a £400 deposit draws that final £100, and another £500 of your money covers the rest of the invoice. Your contributions total £2,500 and government top-ups total £500, paying £3,000 of bills.
The usual £2,000 annual maximum does not let you claim £2,000 in one expensive quarter. Once the account has received its maximum top-up for a period, further deposits do not receive another top-up until the next eligibility period. Check the dates and allowance in your own account, not calendar quarters you have guessed. Disabled children have higher limits.
Allow for money already in the account
A balance left in the account remains available for provider payments. Subtract usable existing balance from the upcoming payment before calculating a new deposit, and check how much top-up allowance is left. Do not add the government contribution again to a balance that already includes it. A withdrawal is not free extra cash: the government takes back the matching top-up.
Confirm that the provider is signed up to receive Tax-Free Childcare payments. Before an invoice is due, check the account balance, arrange the provider payment and verify receipt. Do not budget as though a deposit into the account is itself payment of the nursery invoice, or as though an unconfirmed top-up or transfer will arrive on the same day.
Check the £100k limit for each parent
Both England's working-parent funded hours and Tax-Free Childcare have an upper-income eligibility test. If either parent expects adjusted net income over £100,000 for the current tax year, the family will not qualify for these schemes. Other conditions also apply. Salary alone and combined household income are not the test.
See the salary versus adjusted net income guide before assuming a salary below £100,000 settles eligibility.
Build three monthly scenarios
- No support yet: use the quoted bill before any entitlement begins.
- Confirmed support: use the provider's funded-hours quote and only the Tax-Free Childcare top-up you are eligible to receive.
- Support changes: model the bill if eligibility ends or your attendance pattern changes.
Use actual invoice dates and your childcare account balance for cash flow. Keep the provider bill, your own account contribution and the government top-up as separate lines so you do not count the same support twice.
Do not forget reconfirmation
For Free Childcare for Working Parents and Tax-Free Childcare, you must confirm your details are up to date every three months. Keep the date from your childcare account in the budget calendar. A forecast is not a substitute for reconfirming eligibility.
Start with a free childcare chapter
The £100k Baby, by Practical Finance, covers leave, Child Benefit, childcare, pensions and a year-one checklist. This article promotes the book. General information, not personal financial or tax advice. Rules checked on 1 October 2026; check the official sources for your circumstances.