Children's homes in England are registered and inspected by Ofsted under the children's homes regulatory regime. Adult social care, including care homes, domiciliary care and supported living, is registered and regulated by the Care Quality Commission. These are entirely separate statutory frameworks, and the financial paperwork each regulator demands at registration and throughout the life of the business follows different rules. This guide maps the money and compliance consequences from the accountant's chair, without crossing into safeguarding or care-quality territory.
Which regulator governs which setting
The split is clean. If you accommodate and care for children, Ofsted is your regulator. If you provide personal care, nursing care or accommodation for adults, the Care Quality Commission is your regulator. An operator running both settings under one group holds two separate registrations with two separate regulators and faces two separate compliance tracks.
For the CQC side, the statutory basis is the Health and Social Care Act 2008. CQC's registration guidance confirms that providing a regulated activity without registration is a criminal offence. Trading before registration is complete is not a minor compliance gap; it is a criminal liability. The application includes a financial leg, and the financial viability question must be answered before CQC will approve registration.
For the Ofsted side, the regulatory framework is set by the Children's Homes (England) Regulations 2015 and overseen by Ofsted. The financial-evidence requirements for registration are set out in Ofsted's own guidance, which should be consulted directly at the point of application. No Ofsted-specific figures appear in this guide; any specific fee, timescale or documentary requirement must be confirmed from Ofsted's current published documentation.
Registration paperwork: what each regulator asks about your finances
On the CQC track, a new provider submitting an application must include financial information as part of the registration package. New providers are required to complete and submit a financial viability statement using CQC's own template. This is a substantive document, normally prepared or validated by an accountant, that sets out the financial position and projections of the proposed provider. CQC uses it to satisfy itself that the provider has the financial resources to carry on the regulated activity safely and without risk of sudden collapse.
On the Ofsted track, the application process includes an assessment of the applicant's financial standing. The specific evidence Ofsted requires, including what financial projections, accounts or statements are needed, is set out in Ofsted's current registration guidance. Because Ofsted updates this guidance directly, operators applying to register a children's home must check Ofsted's guidance directly. The critical planning point is this: budget for financial-evidence preparation time on both tracks, and do not assume the CQC financial viability statement template transfers to the Ofsted application.
Registration fees: what to expect from each regulator
Both CQC and Ofsted charge fees for registration and annual continuation. The amounts each regulator charges are set in their respective current fee schemes and are subject to periodic change. This guide does not state a fee figure for either regulator; the risk of asserting an out-of-date number is higher than the convenience of a single quoted sum. Before budgeting for registration on either track, download and read the current fee schedule from the CQC website and the Ofsted website respectively.
What is worth noting from a planning perspective is that the fees are a one-off and annual overhead rather than the dominant registration cost. The accountancy work required to prepare the financial viability statement (CQC side) or the financial-standing evidence (Ofsted side), the legal costs of structuring the entity correctly, and the opportunity cost of the application period are typically larger items in the registration budget than the regulator's own fee.
The financial viability question: CQC FVS versus the Ofsted equivalent
The CQC financial viability statement is a productised accountancy service. CQC's template asks for a structured picture of the provider's financial position: typically including a balance sheet, cash flow projection and a narrative on how the business will remain financially viable. An accountant who understands the CQC registration process can prepare this efficiently. Our CQC financial viability statement service covers exactly this scope.
The FVS product is specific to the CQC track. A children's home applicant submitting to Ofsted does not complete the CQC template. Ofsted has its own financial-standing assessment, and the evidence required should be assembled in line with Ofsted's published guidance, not by repurposing a CQC FVS document.
For operators running both settings, the implication is practical: two sets of financial paperwork, prepared to two different regulators' requirements, at the point of registration and potentially at intervals thereafter. This is a cost and a planning constraint worth building into the business case before the application process begins.
What stays the same on both tracks: tax, payroll and employer costs
Switching from the CQC track to the Ofsted track changes the regulator; it does not change the underlying tax and employment-law reality of running a care business. The following obligations apply to a children's home exactly as to an adult care home.
Employer National Insurance Contributions run at 15% on earnings above the £5,000 secondary threshold (£96 per week, £417 per month) from April 2025. For a children's home with a staffed rota, this is the dominant non-wage employment cost. Modelling it per head, rather than as a blended percentage of total payroll, gives a more accurate picture because the threshold structure means part-time workers generate less employer NIC than full-time workers earning the same total.
Employment Allowance of up to £10,500 per year offsets the employer NIC bill for eligible businesses. A small children's home or group running two or three settings may find the allowance eliminates most or all of the employer NIC liability in a given year.
National Living Wage for workers aged 21 and over is £12.71 per hour from 1 April 2026. Children's home staff on any rota are subject to NMW rules in the same way as adult care staff, including the treatment of sleep-in shifts (only time actually awake for the purposes of working counts) and the self-employed carer misclassification risk.
Worker misclassification is as live a risk in a children's home as in any other care setting. Workers on rotas who cannot send substitutes, are directed as to when and where to work, and are subject to the provider's management are employees for PAYE purposes regardless of the label on their contract. HMRC's employment-status guidance applies without modification to this workforce.
Ongoing financial monitoring: CQC market oversight versus the Ofsted regime
For the largest adult social care providers, CQC operates a market oversight regime under the Care Act 2014. Providers meeting the scale thresholds must notify CQC of material changes in their financial position. This framework exists because the collapse of a large provider can disrupt care for many residents simultaneously, and CQC wants early warning rather than a reactive response.
Ofsted carries out ongoing inspection and oversight of children's homes through a separate framework. The financial-monitoring obligations that apply to Ofsted-registered children's homes are set by Ofsted's own inspection methodology and should be verified against current Ofsted guidance. The CQC market oversight regime does not extend to children's homes.
The practical implication for a group running both settings is that the two regulatory oversight obligations run in parallel rather than blending. Financial reporting to CQC under the market oversight regime covers only the CQC-registered adult-care services; the children's home is separately accountable to Ofsted.
Worked example: a group running both an adult care home and a children's home
Consider an operator who holds one CQC-registered care home for older adults and one Ofsted-registered children's home, both operated under a single limited company.
At the point of initial registration, the company submitted a financial viability statement to CQC for the adult care home, prepared to CQC's template. When the children's home was added, a separate Ofsted application was submitted with financial-standing evidence meeting Ofsted's requirements. The two applications were handled as distinct processes with distinct documentary requirements.
The company's payroll runs as a single payroll. Employer NIC at 15% applies to all employees above the £5,000 secondary threshold, regardless of which setting they work in. The Employment Allowance of up to £10,500 is claimed once at company level and offsets the aggregate employer NIC bill. Staff employed across both settings are covered by the same NMW obligations: the £12.71 NLW from 1 April 2026 applies to all eligible workers, sleep-in shift rules apply to any overnight rota in either home, and the misclassification risk applies wherever a rota structure exists.
VAT is handled at company level. The CQC-registered adult care home supplies CQC-regulated welfare services, which are exempt from VAT under Group 7 of Schedule 9 VATA 1994. The VAT treatment of the children's home supply depends on whether the service qualifies under the same welfare exemption; this is a question that requires specific advice rather than an assumption based on the adult-care position.
Corporation tax, capital allowances and BADR on any future sale all apply at company level in the standard way, unaffected by which regulator oversees which service.
How we support operators on both tracks
The financial-compliance demands of running services under two different regulators are manageable with the right preparation. We work with care group operators to prepare CQC financial viability statements, model payroll and NIC costs across mixed workforces, and structure the accounting so that each regulated service is clearly reported and each regulator's financial-information requirements are met without duplication of effort.
If you are registered with CQC for an adult service and are exploring adding a children's home, or if you are an existing children's home operator who wants to understand how the Ofsted financial-compliance obligations interact with the rest of your business, our children's homes hub sets out the full picture. For the CQC financial viability statement specifically, see our FVS service page.