Anyone planning to start an out-of-school club in 2026 is entering a market that government policy has redrawn in the last eighteen months, and most of the guidance still online was written before that happened. Two separate programmes have changed what is fundable, what is competitive, and, in one segment, whether a paid service can exist at all.
Here is the uncomfortable truth that other guides have not caught up with. The free breakfast club programme is now a statutory duty on state-funded primary schools under the Children’s Wellbeing and Schools Act 2026, with around 3,000 schools funded to deliver free 30-minute morning clubs by September 2026 [1]. If your plan is to charge parents for a breakfast club in a school that is about to receive one for free, you do not have a pricing problem; you have a business that will not exist. The after-school segment, meanwhile, has £289 million in public funding to expand it [2]. Same sector, opposite trajectories, and the difference sits entirely in which side of the school day you choose.
This guide covers what has actually changed and what it means commercially, how to work out which Ofsted register catches you and which exemptions apply, why voluntary registration is usually a revenue decision rather than a compliance one, what registration costs and how the fee rules bite, the staffing and ratio position after the 2024 relaxation, and the session arithmetic that determines whether the club is viable before you sign a lease or a hire agreement. I have advised more than 2,000 businesses since founding SGI in 2014, and childcare is a sector where founders are usually strong on care and weak on unit economics.
What has just changed, and why it decides your model
Two national programmes now shape this market, and they pull in opposite directions.
The National Wraparound Childcare Programme committed £289 million over two years from September 2024, delivered through local authorities, with the ambition that every parent of a primary-aged child who needs it can access term-time childcare from 8am to 6pm in their local area by September 2026 [2]. Crucially, parents still pay for wraparound places. The money funds set-up and expansion where demand is evidenced, not the ongoing service. Local authorities have been able to fund places at private, voluntary, and independent providers, including new entrants, which opens up opportunities for anyone starting now.
The free breakfast club programme runs on entirely different economics, and it is the one that removes a business model rather than creating one. Around 750 early adopter schools began delivering free universal breakfast clubs from April 2025, serving 7 million meals, and the Department for Education is investing a further £80 million to fund roughly 2,000 more schools between April 2026 and March 2027, bringing the total to around 3,000 by September 2026 [1]. These clubs are free to all primary pupils, last at least 30 minutes, and are funded at a flat rate of £25 per day plus a per-pupil rate [3].
The commercial reading is straightforward. Where a school has the free offer, a paid breakfast club competes with the free offer for the first 30 minutes and can only sell the wrap on either side of it, which is a much thinner proposition than a full morning session. After-school provision is untouched by the free offer and actively supported by the wraparound funding. If you are choosing a segment, that is the answer, and it is worth checking your target school’s free breakfast club status before you do anything else.
Do you actually need to register with Ofsted?
This is the question that determines your cost base, your qualification requirements and, as the next section explains, your revenue ceiling. The answer depends on the children’s ages and the length of the session.
There are two registers. The Early Years Register applies if you care for children from birth to 31 August following their fifth birthday for more than two hours a day, which in practice means any club accepting reception-year children. Registration is compulsory, and you must comply with the Statutory Framework for the Early Years Foundation Stage. The compulsory part of the Childcare Register applies to children from 1 September following their fifth birthday, meaning Year 1, up to the age of eight, again for more than two hours a day. The voluntary part covers children aged eight to 18 and clubs that are exempt from compulsory registration but choose to register anyway [4].
Three exemptions matter in practice. A club is generally exempt where it offers adult-led or taught activities from no more than two categories on a prescribed list, which is why football coaching and drama clubs sit outside the requirement. It is exempt where no child attends for more than two hours per day in total. And it is exempt where every child is aged eight or over [4]. A club run directly by a school, with staff employed by the governors and at least one child from that school attending, typically falls under the school’s own registration rather than needing its own.
The two-hour threshold is where founders make expensive mistakes in both directions. A breakfast club running from 7.45am to 8.45am falls under it and needs no registration. An after-school club running 3.15pm to 6 pm does not. Founders who design a two-hour session to dodge registration often find the session is too short to be useful to working parents, who are the entire market. Founders who ignore the threshold entirely discover the requirement after they have taken bookings.
Why registration is a revenue decision, not just a compliance one
Here is the point that changes the arithmetic for exempt clubs, and it is the single most valuable thing in this guide for anyone running an over-eights or short-session model.
Tax-Free Childcare pays £2 for every £8 a parent puts into their childcare account, up to £500 per child per quarter and £2,000 per child per year, doubling to £4,000 for a disabled child [5]. Parents can only spend it with approved childcare, which means a provider registered with Ofsted and separately signed up to receive Tax-Free Childcare payments [5].
An unregistered club is not just less credible; it is 20 per cent more expensive for the parent to provide the same service. A £14 session costs a parent £14 at an unregistered club and £11.20 at a registered one. In contrast, voluntary registration on the Childcare Register costs £114 for a provider operating on domestic or non-domestic premises [6]. For a club with 20 children attending three sessions a week over 38 weeks, the price advantage passed on to parents is worth thousands of pounds a year in terms of competitiveness, against a three-figure annual fee.
The practical guidance is that any club intending to serve working parents should register, even if exempt, and sign up to receive Tax-Free Childcare payments at the same time, rather than treating it as an afterthought. Ofsted’s own guidance notes that registration timescales vary from a few weeks to a few months, so apply considerably earlier than you feel is necessary.
What registration costs and how the fee rules work
The fees are set by the government and are more nuanced than most guides state, because the amount depends on which register you use and how much you operate.
For childcare on domestic or non-domestic premises, which is the category almost every out-of-school club falls into, the fee is £220 for the Early Years Register, £114 for the Childcare Register, and £220 to join both [6]. Registering for the Early Years Register therefore includes the Childcare Register at no extra cost, which matters if your club takes reception children alongside older ones.
A reduced fee of £35 applies to the Early Years Register if you work fewer than three hours a day, fewer than five days a week, or fewer than 45 weeks a year [6]. A term-time-only after-school club operating 38 weeks a year meets the third condition, so a substantial number of clubs qualify for the reduced fee and pay it unnecessarily because they never check.
Three rules about money catch people out. The same fee is payable annually on the anniversary of registration, not just at the time of application. Ofsted cannot refund fees under any circumstances, including where it refuses your application or you withdraw it [6]. And non-payment of the annual fee leads to cancellation: Ofsted emails once the invoice is seven days overdue, sends further reminders, and issues a notice of decision to cancel registration 30 days after the due date [7]. Cancellation means you cannot lawfully care for children, so a missed direct debit is an existential event rather than an administrative one. Set up the direct debit at registration.
Budget separately for enhanced Disclosure and Barring Service checks for every member of staff, paediatric first aid training, food hygiene training where you handle food, and specialist childcare insurance.
Staffing, ratios and qualifications: what the 2024 relaxation actually means
The statutory minimum ratio for wraparound provision, where the youngest children are reception age or older, has been reduced to 1 adult to 30 children up to the age of eight [8]. For older children in wraparound and holiday provision, there is no fixed statutory ratio; providers must simply have enough staff to supervise safely, given the activities offered [9].
Reading that as a licence to run thin is the most dangerous mistake available in this sector. Ofsted still expects safe staffing and will judge you against it; specialist childcare insurers generally will not cover you at the statutory minimum, and local authority guidance to providers commonly recommends operating at around 1:8 for children up to eight [8]. Treat the statutory figure as the floor below which you are unlawful, and the insurer’s requirement as the number you actually staff to.
The EYFS position for wraparound is more permissive than founders expect and worth understanding properly. Settings providing only before- and after-school or holiday care for children who normally attend reception class or older do not need to meet the learning and development and assessment requirements in Sections 1 and 2 of the framework. All settings caring for children aged 0 to 5 must meet the safeguarding and welfare requirements in Section 3 [10]. In practical terms, that means you are not planning an early years curriculum, but you are meeting the full safeguarding regime.
Three training requirements are non-negotiable and should be in place before your registration visit. At least one person holding a current paediatric first aid certificate must be on the premises and available at all times children are present, and must accompany children on outings. A designated practitioner must take lead responsibility for safeguarding and must have completed appropriate child protection training. Anyone preparing or handling food must have food hygiene training [10].
The session arithmetic that decides viability
Run this before you commit to premises, because in this sector staffing is the dominant cost and it is largely fixed by ratio rather than by attendance.
Take an after-school club running 3.15pm to 6pm, which is 2.75 hours, plus roughly 45 minutes of set-up and pack-down. That is 3.5 paid hours per staff member. With 24 children and an operating ratio of 1:8, you need three staff members. Ten and a half staff-hours at the National Living Wage of £12.71 from April 2026 [11] is £133.46 per session in direct wages alone, before employer National Insurance at 15 per cent on earnings above the £5,000 secondary threshold [12], before pension auto-enrolment, and before rent, insurance, snacks, resources, admin time or your own drawings.
That is £5.56 per child per session in wages at full occupancy. Halve the attendance and the cost per child roughly doubles, because you still need two staff for 12 children. This is the structural reality of the business: your costs step up at ratio thresholds, while your revenue moves with individual bookings, so partial occupancy is far more damaging here than in most service businesses.
Now run the same calculation on a breakfast club, and the reason for the earlier warning becomes clear. A 7.45am to 8.45am session is one hour plus 30 minutes of setup, so 1.5 paid hours per staff member. Twenty children, aged 1 to 8, require three staff, totalling 4.5 staff-hours at £12.71 per hour, or £57.20, which is £2.86 per child in wages at full occupancy. Local authority family information services record typical breakfast club fees of between £2.50 and £5.50 per session [13]. At the bottom of that range, the session does not cover its own wages. At the top, it covers wages and very little else. Breakfast clubs were structurally marginal before the free offer arrived, which is precisely why so many operated as loss-leading complements to after-school provision rather than as businesses in their own right.
Build a full first-year model before committing. Our guide to preparing a cash flow forecast covers the method, and the seasonality matters here: you bill 38 weeks and pay rent, insurance and registration for 52.
Getting into a school, which is the real barrier to entry
Premises decide this business. A club needs to be where the children already are, which in almost every case means operating on a school site, and that makes your relationship with the school the single most important commercial asset you will build.
Two things work in your favour in 2026. Local authorities are expected to work with private, voluntary and independent providers to introduce or expand provision between 8am and 6pm under the wraparound programme [2]. And schools operate under right-to-request guidance covering both parents asking the school to deliver wraparound childcare and providers asking to use the school site to deliver it [14]. A provider approaching a school is not asking a favour; they are engaging with a process the school is expected to have.
Approach the local authority’s early years or childcare sufficiency team before you approach schools. They hold the supply and demand data that identifies which schools have unmet need; they administer the wraparound funding, and an introduction from them carries considerably more weight than a cold email to a headteacher. Ask specifically which schools in your area have gaps and whether any capital or start-up contributions remain available.
When you reach the school, expect to agree to a written contract covering the spaces you may use, the rent or licence fee, storage for a pack-away setting, safeguarding information sharing, and what happens to the arrangement if the school changes leadership. Verbal arrangements with a supportive headteacher have ended a considerable number of otherwise viable clubs when that headteacher moved on.
The five mistakes I see most often
- Planning a paid breakfast club without checking whether the school is in the free breakfast club programme, which now covers around 3,000 schools [1].
- Designing sessions at exactly two hours to avoid Ofsted registration, producing a service that does not solve the working parent’s actual problem.
- Staying unregistered when exempt, and quietly charging parents 20 per cent more than a registered competitor for identical provision [5].
- Staffing to the statutory one-to-30 minimum, which insurers generally will not cover and Ofsted will judge as unsafe [8].
- Operating on a school site without a written contract leaves the entire business dependent on a single relationship.
Your first 120 days: a phased implementation plan
Days 1 to 30: establish demand and choose the segment
- Contact the local authority childcare sufficiency team. Ask which schools have evidenced unmet wraparound demand and what funding remains.
- Check the free breakfast club status of every target school before considering a morning offer.
- Survey parents at two or three target schools on session times, days needed and price tolerance. Collect email addresses; these become your launch list.
- Decide your segment and age range, which in turn decides which register catches you.
Days 31 to 60: model, structure and secure premises
- Build the session-level cost model at full, 75 per cent and 50 per cent occupancy, using the ratio you will actually staff to rather than the statutory minimum.
- Decide your legal structure. Constituted community groups and community interest companies can access grant funding that limited companies cannot, so choose deliberately: our comparison of sole trader and limited company structures sets out the trade-offs.
- Negotiate the site agreement in writing, including storage, access times and notice period.
- Obtain specialist childcare insurance quotes and confirm the ratio your insurer requires.
Days 61 to 90: register and recruit
- Submit your Ofsted application, checking first whether you qualify for the £35 reduced fee [6]. Apply early: timescales run from weeks to months.
- Set up the annual fee by direct debit at the point of registration.
- Recruit staff and initiate enhanced DBS checks immediately, as these are often on the critical path.
- Book paediatric first aid, safeguarding lead and food hygiene training so certificates exist before your registration visit.
- Write the policy set Ofsted will ask for: safeguarding, behaviour, complaints, health and safety, collection and non-collection, medication, and data protection.
Days 91 to 120: launch and prove occupancy
- Sign up to receive Tax-Free Childcare payments as soon as your registration number is issued, and tell every enquiring parent about the 20 per cent top-up explicitly [5].
- Launch to the parent list you built in month one rather than to a cold market.
- Track occupancy per session against your break-even ratio weekly, not monthly.
- Review on day 120 whether session times, days, or pricing need changing, and make changes before habits set in, rather than after.
The principle underneath all of this
An out-of-school club is a fixed-cost business wearing the appearance of a variable-cost one. The staffing steps with ratio thresholds, the premises cost runs whether children attend or not, and the registration and insurance are annual regardless of volume. Everything that determines success happens before you open: which school, which side of the school day, which register, and what occupancy your cost base needs.
Founders in this sector are almost always good with children and almost never given a reason to be good with a spreadsheet. The ones whose clubs are still running in five years are the ones who worked out the cost per child per session at 50 per cent occupancy before they signed anything, and who chose their segment against the policy landscape rather than against their own preference.
Every viable out-of-school club is built on one number: what it costs to run a session half empty.
Take the next step
If you are planning to start an out-of-school club and want the segment choice, the session economics and the funding route tested before you commit, our startup consulting service works through exactly this with founders at the pre-launch stage. Childcare is a sector where the regulatory framework and the financial model must be designed together.
If you need a formal plan for a local authority funding application, a landlord or a lender, our business plan writing service produces the projections and occupancy modelling these applications require. You can book a consultation at https://sgi.youcanbook.me/ or start with our free business resources and work through the planning yourself.
Frequently asked questions
Do I need to register with Ofsted to run an after-school club?
Yes, if you care for children under eight for more than two hours a day. Children of reception age or younger require registration on the Early Years Register; children from Year 1 to age eight require the compulsory part of the Childcare Register [4]. Clubs where every child is eight or over, or where sessions run under two hours, or which teach a single activity from no more than two prescribed categories, are exempt but can register voluntarily.
How much does Ofsted registration cost for an out-of-school club?
For a provider on domestic or non-domestic premises, the fee is £220 for the Early Years Register, £114 for the Childcare Register, or £220 for both. A reduced fee of £35 applies to the Early Years Register if you operate less than three hours a day, five days a week or 45 weeks a year, which many term-time clubs meet [6]. The same fee is payable annually, and Ofsted does not issue refunds.
Should I register if my club is exempt?
Usually yes, and the reason is commercial rather than regulatory. Only Ofsted-registered providers who have signed up to the scheme can accept Tax-Free Childcare, which gives parents a 20 per cent government top-up worth up to £2,000 per child per year [5]. An unregistered club is effectively 20 per cent more expensive for a working parent for the same provision, which is a substantial competitive disadvantage at an annual fee of £ 114.
What staff ratio does an out-of-school club need?
The statutory minimum for wraparound provision with reception-age children and older is one adult to 30 children up to age eight, and there is no fixed statutory ratio for older children [8][9]. That is not the number to plan around. Specialist childcare insurers generally require tighter ratios, and local authority guidance commonly recommends ratios of around 1:8 for children up to 8. Confirm your insurer’s requirement before modelling your costs.
Is starting a breakfast club still viable?
It depends entirely on the school. Around 3,000 state-funded primary schools will be funded to deliver free 30-minute breakfast clubs by September 2026 under a statutory duty [1], and a paid club cannot compete with a free one for the same slot. Check the school’s status first. Even before the free offer, the arithmetic was difficult: at 20 children and typical fees of £2.50 to £5.50 per session [13], wages alone consumed most of the revenue.
Can I get funding to start a wraparound club?
Possibly. The National Wraparound Childcare Programme committed £289 million, delivered through local authorities, to fund the set-up and expansion of provision where demand is evidenced, and to fund private, voluntary and independent providers as well as schools [2]. Contact your local authority’s childcare sufficiency team early, because the funding follows evidenced demand rather than applications, and they hold the demand data.
What qualifications do out-of-school club staff need?
For clubs caring only for children of reception age and older, there is no blanket requirement for formal childcare qualifications. What is required is a current paediatric first aid certificate held by someone on the premises whenever children are present, a designated safeguarding lead with appropriate child protection training, food hygiene training for anyone handling food, and enhanced DBS checks for all staff [10]. Clubs taking children below reception age must meet the EYFS qualification requirements for that age group.
References
[1] Department for Education, Free breakfast clubs: guidance and national rollout, 2026. https://www.gov.uk/government/publications/free-breakfast-clubs-guidance-for-schools-and-trusts
[2] Department for Education, National Wraparound Childcare Programme. https://www.gov.uk/government/publications/wraparound-childcare-programme-guidance-for-local-authorities
[3] Department for Education, Free breakfast clubs grant: methodology for September 2026 to July 2027. https://www.gov.uk/government/publications/free-breakfast-clubs-grant-2026-to-2027-academic-year/free-breakfast-clubs-grant-methodology-for-september-2026-to-july-2027
[4] Ofsted, Childminders and childcare providers: register with Ofsted, the Ofsted registers. https://www.gov.uk/guidance/childminders-and-childcare-providers-register-with-ofsted/the-ofsted-registers
[5] HM Revenue and Customs, Tax-Free Childcare. https://www.gov.uk/tax-free-childcare
[6] Ofsted, Childminders and childcare providers: register with Ofsted, fees, updated February 2026. https://www.gov.uk/guidance/childminders-and-childcare-providers-register-with-ofsted/fees
[7] Ofsted, Paying your annual fee: what you need to know, July 2026. https://earlyyears.blog.gov.uk/2026/07/30/paying-your-annual-fee-what-you-need-to-know/
[8] Oxfordshire County Council, Setting up new wraparound childcare provision. https://www.oxfordshire.gov.uk/business/information-providers/childrens-services-providers/support-early-years-providers/business-and-funding-childcare-providers/wraparound-childcare-provision
[9] West Sussex County Council, Wraparound childcare and holiday playschemes. https://www.westsussex.gov.uk/education-children-and-families/childcare-and-early-education/childcare-options-and-funding/types-of-childcare/wraparound-childcare-and-holiday-playschemes
[10] Department for Education, Statutory framework for the early years foundation stage. https://www.gov.uk/government/publications/early-years-foundation-stage-framework–2
[11] GOV.UK, National Minimum Wage and National Living Wage rates from 1 April 2026. https://www.gov.uk/national-minimum-wage-rates
[12] HM Revenue and Customs, Rates and thresholds for employers 2026 to 2027. https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027
[13] Westminster Family Information Service, Breakfast and after-school clubs. https://fisd.westminster.gov.uk/kb5/westminster/fis/advice.page?id=CihuEETJegs
[14] Department for Education, Responding to requests for wraparound childcare. https://www.gov.uk/government/publications/wraparound-childcare-guidance-for-schools-and-trusts
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Kurt Graver is the founder and CEO of SGI Consultants, a business consultancy that has helped over 2,000 entrepreneurs establish successful startups using systematic business development methodologies. An accountant with an MBA and 25 years of commerce and consultancy experience, Kurt specialises in strategic planning, market analysis, and sustainable business growth