Accepting Tax-Free Childcare Payments

The UK Tax-Free Childcare scheme gives eligible working parents £2 from the government for every £8 they pay into their childcare account, up to £2,000 per child each year (or up to £4,000 for children with a disability).

KinderStart integrates directly with HMRC’s official Tax-Free Childcare Payments API, eliminating manual reference copying, lost BACS credits, and messy paper reconciliation.

1. Setting Up as a Childminder

To accept Tax-Free Childcare payments, you need two things:

1. Sign up on the Government Provider Portal: Ensure your setting is registered on HMRC's Childcare Provider Portal (childcare-service.tax.service.gov.uk) and that your bank account details (sort code and account number) are up to date there. HMRC pays funds directly into this bank account via BACS.
2. Complete Your Business Profile in KinderStart:
   • Open Settings ➔ Business Profile.
   • Select your Region (England, Scotland, or Wales).
   • Enter your Registration Number (Ofsted Registration Number in England, Care Inspectorate Number in Scotland, or Care Inspectorate Wales Number in Wales).
   • Ensure your Setting Postcode matches the postcode registered with your regulator and HMRC.

The in-app Tax-Free Childcare Readiness indicator will turn green once your details are valid.

2. How Parents Pay Invoices

Parents linked to your setting can pay their monthly invoices in seconds:

1. In the Parent Portal, open Finances and tap any invoice marked Due.
2. Tap Pay with Tax-Free Childcare.
3. Connect Account (First Time Only): Tap Connect HMRC Account to authenticate securely via HMRC Government Gateway, and enter the child's government payment reference (e.g. MPHI12345TFC).
4. Review Cleared Funds: KinderStart displays the parent's cleared government balance in real time.
5. Pay Full or Partial Balance: Tap Pay £X.XX with Tax-Free Childcare.

The parent receives an immediate confirmation with an official HMRC Payment Reference and estimated settlement date.

3. How Partial and Split Payments Work

If a parent’s cleared government balance doesn't cover the full invoice, or if they wish to split the charge between Tax-Free Childcare and a private card or bank transfer:

• KinderStart automatically applies the maximum available government funds.
• The invoice updates to Tax-Free Childcare Pending, clearly displaying the Remaining Due balance.
• Parents can pay the remaining balance using standard card payment or a private bank transfer.

4. One-Tap Childminder Settlement Confirmation

When a parent instructs a payment:

1. The invoice displays a Tax-Free Childcare Pending badge.
2. In Finances ➔ Invoices, open the invoice to view the Tax-Free Childcare Allocations panel showing:
   • Official HMRC Payment Reference (proof of accepted instruction)
   • Estimated settlement date
   • Amount in pence
3. Once the BACS transfer clears in your registered bank account (typically 2 to 3 working days), tap Confirm Received.
4. The allocation is marked as Confirmed Received, the invoice moves to Paid, and an official statutory receipt is generated for both parties.

What to do next

• Choosing how you invoice families: learn about Contract, Actuals, Termly, and Annual billing.
• Tracking your income and expenses: your finance dashboard and year-end tax figures.