🔒 To allow TFC payments, your setting needs to have in-app payments enabled
Steps to Take Before Setting Up TFC
Before taking payments from Tax-free Childcare (TFC), there are a few steps you need to take
First up, make sure you have in-app payments set up and verified. You can read more about that here
Next, invoice parents so they have a balance to pay. This makes the Pay now button on their Balance tab clickable, helping them to start their TFC setup
Be set up and verified with HMRC to receive TFC funds, including having a bank account associated with their system where the payments will be received
Setting up Tax Free Childcare
You can set up TFC payments in your in-app payment settings. Once you're there, you'll need to enter your Site's postcode and enter your Ofsted ID (if you're in England), your Care Inspectorate ID (if you're in Scotland or Wales), or your Nursery Registration Number (if you're in Northern Ireland).
☝️ It is really important that you enter your details into Famly exactly as they appear in your records. Make sure to double check that you've copied the exact Ofsted ID (some Ofsted IDs contain an EY and some don't, do not enter an EY if you don't see an EY in your records), Care Inspectorate ID or Nursery Registration Number. Any typos or mistakes will cause all TFC payments to fail
If you need help finding your ID or Registration number, follow the relevant link for your location below:
England: https://reports.ofsted.gov.uk/
Wales: careinspectorate.wales
Northern Ireland: https://www.familysupportni.gov.uk/
Click on Enable TFC when you're ready.
💡 Please note that you can only link one Ofsted ID per site. For example, if you have separate IDs for the Nursery and Out of School Club, you will need to create a new Famly subscription for the Out of School Club
How Parents Set Up TFC Payments
And that's your bit done and dusted! Now, parents need to opt in.
You can direct parents to this article that walks them through the steps to link their TFC account with their Famly account:
Parents should be made aware that setting up TFC payments requires multiple steps, both on Famly and on gov.uk on their TFC accounts. If parents reach out and need a little extra help, the steps they need to take are outlined below:
💡 If parents are having trouble connecting Famly to their HMRC accounts using smartphones or tablets, let them know to try again on a desktop computer
Step 1:
Once your site has confirmed the TFC setup in your settings, parents can add their TFC account as a payment method. They can do this via the in-app banner or in the same way that they would've done for credit card and direct debit payment options by clicking on Add payment method in their Balance tab. They just need to select Set up Tax-free Childcare from their payment options, then click on Give permission to HMRC:
Step 2:
Next, parents will need to log into each of their TFC accounts (they have one for each child) and give Famly permission to link to their TFC accounts. Once they give permission, the parent will be redirected back to Famly.
Step 3:
Back on Famly, parents need to enter each child's unique reference ID to ensure the right children are connected.
Parents can find their child's reference number in their TFC account by clicking on Account → Manage account → then scrolling right to the bottom where it says "the payment reference for your child is ..."
The reference ID is unique to their child and is:
First letter of first name
Three first letters of surname
Five random digits
Once they confirm, they'll have connected their TFC account to Famly.
Step 4:
Then the next time the parent has a balance to pay, they can choose their children’s TFC accounts and can pay their balances. Famly will display the balance including the government top-ups so that parents can see if they can pay the balance in full or if they have to add more money into their TFC account.
Parents can use the amount in Cleared funds to pay with, which is what has already been topped up by HMRC
💡 Parents still need to top up their TFC accounts via bank transfer, but they don’t need to log into the TFC portal anymore to pay your site.
Step 5:
If the parent is a bill payer for multiple children, they will need to enter the amount that they want to pay for each child. They can do this by using the Custom amount option when they click the three dots '...'
If parents are invoiced for non-eligible items, it's their responsibility to make sure they only use TFC for eligible items. For pre-primary age that’s everything, but for OOSC, for example, it’s only sessions but not consumables
Step 6:
Lastly, when parents tap Pay, the payment is automatically added to their bill payer account and their balance is updated!
💡 Famly only knows if a payment has been initiated via HMRC and whether the money has left the TFC account, not whether the money arrived in your site's bank account.
Setting up Automatic Tax-free Childcare Payments
Parents can automate TFC payments for their children following this guide:
Parents with multiple children may notice that the option to automate isn't possible if they have linked all their children's TFC accounts to their bill payer account. They will still be able to make manual payments, but if they'd prefer to automate TFC payments for all their children, they may ask you to split or duplicate their bill payer account to accommodate this. For guidance on how to split bill payers, check out this article:
Troubleshooting Tax Free Childcare Payments
If Tax Free Childcare payments are not working at your setting, there may be a few reasons. Here are some helpful tips to troubleshoot any TFC issues:
The Registration ID has to match exactly with your Ofsted ID (if you're in England), your Care Inspectorate ID (if you're in Scotland or Wales), or your Nursery Registration Number (if you're in Northern Ireland)
Parents need to have your setting linked to their TFC account, which they do in the portal
Parents need to be marked as invoice recipients or bill payers
TFC setup can only be used by one login, even if there are multiple invoice recipients linked to a bill payer
Parents need to have topped up their TFC accounts
Helpful Resources for Setting up Tax-free Childcare
You'll find a number of helpful guides attached which you can print out or send to parents if you'd like to give them a helping hand while setting up TFC payments.
Click on any of the PDFs below to download your own copy!