Accepting Tax-Free Childcare payments

Tax-Free Childcare gives eligible working parents £2 from the government for every £8 they pay into their childcare account, up to £2,000 a child each year (£4,000 for a disabled child). KinderStart connects to HMRC's Tax-Free Childcare Payments API, so a parent pays your invoice from their account in the app, and you confirm it when the money reaches your bank. No copying references, no lost BACS credits.

Before you start

You need two things in place:

1. Register on HMRC's Childcare Provider Portal (childcare-service.tax.service.gov.uk) and keep your bank details up to date there. HMRC pays you by BACS into that account.
2. Complete your business profile in KinderStart: in Business Settings, tap your business name at the top. Choose your region under Curriculum Framework & Region, enter your registration number (Ofsted, Care Inspectorate or Care Inspectorate Wales) and check your Postcode matches the one your regulator and HMRC hold. The box below turns green and reads Ready to receive Tax-Free Childcare payments once your details are valid.

1. Send the invoice

Open the Finance tab, tap +, choose to create an invoice and pick the child and the month. The charges come from the child's contract. Tap Next: check attendance, then Next: see the charges, then Next: send and Review and send. The invoice appears in the parent's app straight away.

2. The parent pays with Tax-Free Childcare

In the parent app, the parent opens Finances, taps Due, and taps Pay with Tax-Free Childcare on the invoice.

• First time only: they link their account by entering the child's Tax-Free Childcare reference (for example MPHI12345TFC) and tapping Link account.
• KinderStart shows their cleared balance and the split: their share and the 20% government top-up.
• They tap Pay £X.XX. If their balance doesn't cover the whole invoice, KinderStart uses what is available and the rest stays due, to pay by card or bank transfer.

They see Payment instructed, with HMRC's payment reference and the date the money should arrive.

3. See the payment on its way

In Finance → Invoices, the invoice shows TFC Pending. Tap its payment button to see the Tax-Free Childcare Pending panel: the amount, HMRC's payment reference and the estimated arrival date.

4. Confirm it when the money arrives

HMRC pays by BACS, usually within 2 to 3 working days. When the money is in your bank, tap Confirm Received. The invoice moves to Paid and a receipt is created for you and the parent.

What to do next

• Choosing how you invoice families: booked sessions, diary hours, or equal monthly payments.
• Tracking your income and expenses: your finance dashboard and year-end figures.