A Guide for Schools and Providers

The School Milk Subsidy Scheme helps reduce the cost of milk and eligible dairy products for schoolchildren in England and Wales. If you’re a school, local authority, or milk supplier, this scheme can help you provide milk at a lower price, or even for free, especially for younger pupils. This guide explains who can apply, which products qualify, how to make a claim, and the key rules you must follow.

What Is the School Milk Subsidy Scheme?

The scheme provides a government subsidy for specific dairy products served in schools. Its aim is to encourage healthy eating habits by making milk and similar products more affordable and accessible to pupils. The scheme is managed by the Rural Payments Agency (RPA) and applies to schools in England and Wales.

Who Can Apply?

You can apply if you are:

A school (pre-school, primary, or secondary).
A local authority.
A milk or dairy supplier.
An organisation set up specifically to deliver subsidised milk.

Before you can claim, you must register with the RPA as a “trader” and apply for approval using form SCM/1, available from the Rural Payments Agency website.

Who Is Eligible for Subsidised Milk?

Pupils qualify if they regularly attend an Ofsted-registered:

Pre-school or nursery.
Primary school.
Secondary school.

Special Notes:

Children under 5 usually receive free milk through the Nursery Milk Scheme (not this subsidy).
Reception pupils aged under 5 can be claimed for under either scheme, but not both.
In Wales, all pupils in Key Stage 1 receive free milk, fully funded by the Welsh Government.

Which Products Are Eligible?

Products must:

Come from cows, goats, or sheep.
Originate from within the EU.
Meet approved safety standards.

Eligible products include:

Whole or semi-skimmed heat-treated milk (plain or flavoured).
Plain yoghurt.
UHT milk.
Lactose-free or lactose-reduced milk.

Important: Flavoured milk must contain at least 90% milk and no more than 7% added sugar or honey.

Distribution Rules

Subsidised milk must be offered:

As a drink with a meal.
As a mid-morning or afternoon drink.
As a clearly separate item in a meal (not as an ingredient, e.g. not in custard or mashed potatoes).

You cannot claim for:

Products used in cooking.
Soya or rice milk.
Powdered or reconstituted milk.
Products consumed by staff or on non-school days.

How Much Can You Claim?

Each eligible pupil may receive up to 250ml per day. Claims must be based on the actual amount distributed.

To calculate your entitlement:

Multiply: school days × eligible pupils × 0.00025.
The result gives the total kilolitres you can claim for.

You can use school census data for pupil numbers, but do not include pupils under 5 covered by the Nursery Milk Scheme.

Subsidy Rates

For Primary School Pupils

250ml: 5.67 pence
200ml: 4.54 pence
⅓ pint: 4.30 pence
1 litre: 22.68 pence

For Secondary School Pupils

250ml: 4.67 pence
200ml: 3.74 pence
⅓ pint: 3.54 pence
1 litre: 18.69 pence

In Wales, pupils in Key Stage 1 benefit from additional top-up payments, allowing schools to claim the full cost of milk plus a contribution toward administrative expenses.

How to Claim

Get approved:
Register as a trader and apply for scheme approval (form SCM/1).
Gather your records:
Include school names, pupil numbers, and pricing details.
Submit your claim:
After each claim period ends, complete and return form SCM/5.
Meet deadlines:
Submit claims within 3 months of the end of each claim period.

If you’re claiming for multiple schools, you must submit annexes with school-level details.

Using the Subsidy: Pricing Rules

If schools charge for milk:

The selling price must be reduced by the subsidy amount.
The maximum markup is 8 pence per portion, including administration and distribution costs.
All costs must be reasonable and clearly documented.

If schools provide milk free of charge, they are automatically considered to have passed on the subsidy.

Allowable Costs You Can Claim

You can claim for:

Staff time spent distributing milk or processing claims.
Refrigeration, storage, and waste disposal.
Paperwork, printing, and postage related to the scheme.
Cups, straws, and cleaning materials.

In Wales, you can claim full costs for Key Stage 1 milk if total costs exceed 3 pence per portion and you provide supporting evidence.

Record-Keeping Requirements

You must keep complete and accurate records for at least 3 years, including:

Delivery notes and invoices.
Receipts and proof of payment.
Pupil numbers and school days.
Calculations for selling prices.
Claim forms and related documents.

Records may be kept digitally, but they must be easily accessible and available for audit if requested.

Penalties for Errors

If you break the scheme rules, you may have to:

Repay subsidies.
Pay a penalty for over-claiming.
Lose approval to claim in the future.

Errors that are obvious or not your fault may not lead to penalties, but all claims must be carefully checked before submission.

Key Tips for Schools and Providers

Register early and plan your claim periods.
Ensure milk is offered correctly (as a drink, not an ingredient).
Keep accurate records and receipts.
Display a poster at the school entrance showing participation in the scheme.
For complex or shared claims, agree on cost-sharing and responsibilities in writing.

Further Information

For full guidance, forms, and subsidy rate updates, visit the Rural Payments Agency (RPA) section on GOV.UK and search for the School Milk Subsidy Scheme.

Don’t Forget

You might also qualify for funding through ECO4 or the Great British Insulation Scheme (GBIS).

These government-backed programmes can help cover the cost of insulation, heating upgrades, and other energy efficiency improvements, making your home or buildings warmer, more efficient, and cheaper to run.

Check your eligibility today, it’s quick, free, and could help you save money while creating a more comfortable and sustainable space.

How to Access the School Milk Subsidy Scheme