How to Accept Tax Free Childcare Payment for After School Clubs


·5 min read

Introduction: How to Accept Tax Free Childcare Payment for After School Clubs

As the world evolves, the needs of working parents do too. One such necessity is the ability to have reliable and financially accessible after school clubs for their children. With the introduction of tax-free childcare, a UK government initiative designed to support working parents, accessibility and affordability of these clubs have significantly improved. In this article, we'll delve into the mechanics of tax-free childcare payments and how after school clubs can leverage this scheme.

Understanding Tax-Free Childcare Payments

The tax-free childcare scheme is a governmental initiative designed to help working parents with childcare costs. For every £8 parents pay into the scheme, the government adds an extra £2, up to a maximum of £2,000 per child per year, or £4,000 for disabled children.

Who is eligible to use the scheme?

Eligibility for the scheme requires both parents to be working (or the sole parent in a single-parent family) and each earning at least the national minimum wage or living wage for 16 hours a week. Each parent must also earn less than £100,000 annually.

How does Tax-Free Childcare work for parents?

Parents can open an online tax-free childcare account via the government's website. For every £8 they deposit, the government will add £2. The combined funds are then used to pay approved childcare providers, such as registered after school clubs, directly from this account.

How does Tax-Free Childcare work for providers?

After school clubs, as childcare providers, need to sign up with the scheme to be able to accept payments from parents' tax-free childcare accounts. Providers receive these payments directly into their bank account from the scheme. We will take a look at how to accept tax-free childcare payment for after school clubs in the next section.

You can continue to participate in any childcare voucher scheme as Tax-free Childcare is a separate government scheme.

How to Accept Tax-Free Childcare Payment for After School Clubs

For after school clubs to be eligible to accept tax-free childcare payments, they must meet specific criteria and follow a registration process. Here is a detailed guide:

Confirm Eligibility

The first step is to ensure that your club is eligible to participate in the scheme. This typically involves meeting safety and staffing regulations and being registered with an approved regulator, such as Ofsted in England, the Care Inspectorate in Scotland, or CSSIW in Wales.

Register with an Approved Regulator

Once you've confirmed your eligibility, the next step is to register with the approved regulator for your region. This registration will generally involve a rigorous inspection to ensure you meet the childcare standards set by the regulator.

Sign Up for the Tax-Free Childcare Scheme

After successfully registering with the regulator, you can sign up for the tax-free childcare scheme. This process is carried out via the UK Government's online portal, the Government Gateway.

To sign up, you'll need several pieces of information and documents:

  • 11-digit user ID from your invitation letter: You can contact the helpline to request one.
  • Your unique taxpayer reference (UTR): If you don't have a UTR, you will need to apply for one from the HM Revenue and Customs (HMRC).
  • Bank account and Postcode details for your after school club: These are necessary for receiving payments from the scheme.
  • Information about your after school club: This includes details such as your registered address, the ages of children you provide care for, your opening hours, and your fee structure.

You can find further details about the Tax-Free Childcare provider sign-up process on the UK Government's official website: How to Accept Tax-Free Childcare Payment for After School Clubs.

Once you've gathered all the necessary information, you can follow the prompts on the Government Gateway to complete your sign-up for the tax-free childcare scheme. It's important to keep all these details updated in the Government Gateway, as parents will rely on this information when selecting you as their childcare provider.

Inform Parents and Receive Payments

Make sure to communicate with parents about your acceptance of tax-free childcare payments. Parents can find your details through their childcare account by searching for your club name, address, postcode or regulator reference. Payments from parents will then be made directly into your bank account via the tax-free childcare scheme.

By following these steps, after school clubs can set themselves up to accept tax-free childcare payments, providing an affordable solution for parents and a reliable income stream for the club.

Troubleshooting Common Issues

As with any new system, there may be some initial hiccups when setting up tax-free childcare payments. Here are a few common issues and how to handle them:

  • Delays in Payments: Sometimes, there may be delays in payments from parents. Ensure to regularly communicate with parents about payment schedules and remind them about payment dates.
  • Difficulty in Registering: The registration process can be complex. It's crucial to follow the registration steps accurately and seek assistance from the regulatory body if required.
  • Trouble with the Government Gateway: Ensure you keep your login details safe and readily available. If you encounter issues, the Government Gateway helpdesk is available for assistance.
  • Miscommunication with Parents: Be clear about how parents should use it to pay. Providing written instructions or holding a brief orientation can be helpful.

How to Streamline the Process of Accepting Tax-Free Childcare Payments

Once your after school club is set up to accept tax-free childcare payments, managing these transactions can still be a challenging task. You need to take note of each child’s unique child reference number, and track any payments that come into your bank account.

This is where Pembee comes into the picture. Pembee is an after school club booking system designed to streamline and automate the process of managing after school club bookings, allowing parents to book their kids to your classes by themselves, and if they are using tax-free childcare payments, also recording the child reference number.

Each booking made in Pembee with tax-free childcare payments will show up as ‘Balance outstanding’. Once you receive a payment in your bank, you can easily search based on parent's name, or booking number to help you record the payment. This level of automation significantly reduces the administrative burden, freeing up your time to focus on providing quality childcare.

Setup is easy and intuitive and there are detailed step-by-step guides to help you start.


Embracing tax-free childcare payments can greatly benefit both parents and after school clubs. Not only does it make childcare more affordable for working parents, but it also provides a steady income stream for clubs.

Setting up your after school club to accept tax-free childcare payments may seem like a daunting task, but by following the steps outlined in this blog and leveraging the power of platforms like Pembee, it can be a smooth and manageable process.

So why wait? Start the process today and open up your after school club to more parents by accepting tax-free childcare payments.

How to accept tax free childcare payment for after school clubs