Funded hours are usually described only as a number of hours, which hides how much they are actually worth in cash, and why that value changes as a child gets older.
Why the rate depends on age
The government does not pay childcare providers a flat rate per funded hour. The Department for Education sets national average hourly funding rates by age band, reflecting the higher staffing ratios needed for younger children. Babies and toddlers cost providers more to look after per hour than three and four year olds, and the funding rate follows that cost.
The bands that matter for the £100k cliff
- Under 9 months: no funded-hours entitlement under the working-parents scheme.
- 9 months to 3 years: the working-parents entitlement, funded at the highest hourly rate of the bands that qualify.
- 3 to 4 years: the entitlement continues, funded at a lower hourly rate than the younger band.
- 5 and over (school age): no funded-hours entitlement under this scheme.
Why this matters for the £100,000 decision
When weighing whether to take a bonus, a pay rise, or hold RSUs that might vest you over £100,000, the funded-hours value lost is highest while a child is youngest. A family with a baby approaching the funded-hours age range stands to lose more from crossing the cliff than the same family will once that child reaches school age, even before counting Tax-Free Childcare on top.
- Multiple children in the funded-hours age range multiply the lost value, since the entitlement and its loss apply per child.
- Combine the funded-hours value with Tax-Free Childcare's up-to-£2,000-per-child top-up to see the full childcare cost of crossing £100,000, not just the tax cost.