Funded hours: what nurseries can charge and invoice

Funded hours must be free to parents. That is the starting point of the DfE’s statutory guidance on early education and childcare, valid from 1 April 2026, which your local authority’s funding agreement puts into your contract. Everything else a nursery charges sits around those hours: meals, consumables, activities and extra paid hours, each allowed only on the guidance’s terms.

This guide covers settings in England. Your local authority’s provider agreement may add its own rules and templates, so read it alongside.

What you can and cannot charge

You can charge for:

• Meals and snacks you provide.
• Non-food consumables the child uses, such as nappies, wipes or sun cream.
• Activities, such as specialist tuition or trips.
• Extra hours beyond the funded entitlement, at your own rates.

You cannot charge:

• Top-up fees: the difference between your usual rate and the funding you receive.
• Non-refundable deposits, registration fees or retainers as a condition of taking up a funded place.
• Any mandatory charge for the funded hours themselves.
• Vague charges that are not identified and itemised as a chargeable extra.

Charges must be voluntary

This is the rule settings most often get wrong (paragraphs A1.31 to A1.36 of the 2026 guidance):

• No charge may be a condition of the funded place. A family that declines every extra still gets its funded hours.
• Parents must be able to opt out of chargeable extras, and a child who does not take part in an optional activity must still receive provision that meets the EYFS.
• You must have a policy with reasonable alternatives, such as letting parents bring their own food or consumables, or waiving the charge.

So “lunch is £3.50 a day on funded sessions” is fine. “Funded places are only available if you pay for lunch” is not.

Think about the families least able to pay. The guidance asks local authorities to make sure charges do not keep disadvantaged children out of their place, and a setting where only families who can afford extras can use their hours will hear about it.

What an invoice must show

Invoices and receipts should be itemised, with these shown separately (paragraph A1.42):

1. Funded hours, so parents can see they are free.
2. Additional private paid hours.
3. Food, meals and snacks.
4. Non-food consumables.
5. Activities.

The invoice should also carry your full details, so it can be traced to you. Many local authorities publish an invoice template; if yours does, it is the safest layout to follow.

A clear invoice also helps families claim. A parent using Universal Credit childcare costs or Tax-Free Childcare needs to show what they paid and for which dates.

Publishing your charges

Chargeable extras should be published on your website, or through your local authority’s Family Information Service if you have no website (paragraph A1.40). The listing covers the price of each extra and the pattern of hours families can take their entitlement in. Local authorities may exempt childminders and providers caring for 10 or fewer children from publishing online and from the templates.

The parental declaration

Most local authorities ask parents to sign a declaration when they take up a funded place, showing the funded hours per day and week, the number of weeks, and any paid hours and extras they have chosen. A parent should sign only when they agree with every detail, and a new declaration is needed when something changes.

Stretched and term-time places

The entitlement is 570 hours a year for 15 hours, or 1,140 for 30, normally taken over 38 weeks. Where you offer it, families can stretch it over more weeks with fewer hours each week, and you should tell them how many funded hours they get per day and per week. It cannot be squeezed into fewer than 38 weeks. Our free funded hours calculator works out the funded hours a week and the monthly invoice for any booking.

Checklist

• Funded hours show as free on every invoice.
• Every charge is itemised under paid hours, food, consumables or activities.
• Parents can opt out of each extra, and know how.
• A written policy sets out the alternatives: food from home, own consumables, or a waived charge.
• No top-up fees, and no non-refundable deposits or registration fees tied to the funded place.
• Charges are published on your website or through the Family Information Service.
• Each family has a declaration that matches what you invoice.
• Invoices carry your full details and the dates they cover.

Where Coat Peg fits

Coat Peg’s invoices group every line under the DfE’s five headings, with funded hours, paid hours, food, consumables and activities each subtotalled, and say on the invoice that funded hours are free and extras optional. An extra charged by default can be switched off for a child with “Not taking this”, which is how a family’s opt-out is recorded, from a date. Each child’s declaration sets out their funded and paid hours and the extras they take. An issued invoice is never changed; a correction is a credit note.