Can I save on childcare?
Childcare can be tricky to figure out, especially if both parents are working - but there are a number of ways to cut the costs.
The best options will depend on your circumstances, so get to grips with everything that’s available to you before making a plan.
Here, we explain your childcare choices and provide tips that could help you save money on childcare.
1. Consider your childcare choices
The four main options to think about are registered childminders, nurseries, nannies and au pairs. The type that’s best for you is likely to depend on:
- How many hours a day and at what times you need childcare
- Which days of the week you need childcare
- Your budget
- Your child’s likes/dislikes, interests and behaviour.
The average cost of a childminder for 25 hours of care is £113 a week for a child under two or £112 for a child over two according to the Family and Childcare Trust report.
Care will normally be provided in the childminder's home, with a maximum of six children under eight-years old
The childminder would have completed a training course and 12-hour paediatric first aid course and will be registered and inspected by Ofsted every two to three years
The main benefit of a childminder is that they can provide tailored care for your child.
The average cost for a part-time nursery placement (25 hours) is £127 a week for a child under two or £124 for a child over two according to the Family and Childcare Trust report.
Care will take place at the nursery, which will be required to be inspected every two or three years. At least half the staff must hold a valid childcare qualification at level two or above, and there are limits for how many children are allocated to each carer, depending on the children’s age.
A nursery can help your child develop important social skills but the hours are generally fixed with little flexibility.
A nanny is someone who comes to look after your child at your home. They can live with you or attend your home daily.
Your nanny will be entitled to national minimum wage and as the employer, you'll also need to cover their tax and NI contributions; an average 25 hours a week will cost between £250-£400
Nannies are not legally required to have a childcare qualification; there are no official ratios for how many children they can look after and they are only inspected if they’re registered.
An au pair lives with you and will be learning the local language and culture in their spare time.
They are meant to be treated as part of the family rather than someone that works for you. This means they can be paid 'pocket money' (the government recommends £70 to £85 a week) and you won't usually have to deal with their tax or NI.
However, you won't be able to use childcare vouchers or claim the childcare element of working tax credit to pay for them and you will have to factor in the cost of their room and board on top of what you pay them.
2. Working? Try tax-free childcare
Once you’ve decided on the kind of care you want, you can look into the help available from the government to pay for it.
Tax-free childcare is a government scheme that pays working parents a top-up based on their childcare costs. You can get up to £500 every three months for each child looked after by an approved childcare provider, sent via an online account.
You have to apply for tax-free childcare through HMRC, and the following eligibility criteria apply:
- Both you and your partner, if you have one, must be in work (or be on sick leave, annual leave or parental leave) and earning at least national minimum wage or living wage for 16 hours a week.
- You can be self-employed. If you are, the earning limits don’t apply if you started your business less than a year ago.
- You can’t claim if you or your partner earn more than £100,000.
- Your child or children must be aged 11 or under.
- Adopted children qualify, but foster children do not.
- You can receive payments for children with disabilities up to 17-years old.
Find out more: tax-free childcare and other ways to save
3. Already got childcare vouchers? Make sure you use them
Childcare vouchers used to be an alternative to tax-free childcare, although this scheme closed to new applicants on 4 October 2018.
If you’re currently using childcare vouchers, you can keep claiming for as long as your employer continues to offer it.
You don’t have to spend your childcare vouchers right away. Some people choose to save them up to use over summer holidays, for instance, when they know that childcare is going to be more expensive.
The expiry date on the vouchers is fairly long - just make sure to use them while your children are under the age of 15 (or 17 if they’re disabled).
The vouchers can only be spent with approved childcare providers, so make sure to check your chosen nursery or childminder accepts them. It’s also possible to spend childcare vouchers at some summer camps and groups.
4. On a low income? Go for tax credits or Universal Credit
To qualify for working tax credit, you and your partner - if you have one - must both work at least 16 hours a week. One of you can be out of work if you are entitled to carer’s allowance, in prison, hospital or incapacitated.
You can get up to 70% of what you pay for childcare, up to a maximum of £175 per week for one child, or £300 for two or more children.
Universal Credit is gradually replacing other benefits, including tax credits. If you're already on Universal Credit, you can't apply for tax credits and the childcare element will be included with your overall payment.
You can get 85% of your childcare costs covered, to a maximum of £646.35 a month for one child, or £1,108.04 for two or more children.
5. Take advantage of free childcare hours
In England, there are schemes in place to help parents with very young children.
The ‘Free childcare for two-year olds’ scheme is for those who receive:
- income support
- income-based jobseeker’s allowance
- income-related employment and support allowance
- Universal Credit
- tax credits or the working tax credit 4-week run
- the guaranteed element of state pension credit or
- support through part 6 of the Immigration and Asylum Act.
You can also be eligible if your child:
- is looked after by a local council
- gets disability living allowance
- has left care under a special guardianship order, child arrangements order or adoption order, or
- has a current statement of special needs, or an education, health and care plan.
In addition, everyone is eligible for 15 hours of free childcare a week for children aged three or four, even if you don’t work. This is for 38 weeks a year, but you can choose to take fewer hours to spread this over more weeks.
You may be able to get 30 hours of free childcare a week if you’re on a low income, as long as you and your partner earn at least the national living wage or living wage.
Bear in mind that only specially accredited childminders can participate with these offers.
6. You can get free childcare in Scotland, Wales and Northern Ireland, too
In Scotland, all three and four-year olds are entitled to 600 hours of free childcare a year, which is higher than the 570 hours offered in England. There is also a scheme for two-year olds if you receive certain benefits and are on a low income.
In Wales, all three and four-year olds can get 30 hours of free childcare a week. The 30 hours is made up of a minimum of 10 hours of early education a week and a maximum of 20 hours a week of childcare.
If you’re in Northern Ireland, three and four-year olds get two-and-a-half hours of free childcare every day during term time.
7. Try nanny sharing
If you have a friend or neighbour who is also looking to cut the costs of childcare, suggesting a nanny share might be the way forward. Not only will you save money, but it’s more socialising for the children, too.
Websites such as childcare.co.uk is a good place to find someone in your local area willing to be part of a nanny-share arrangement.
8. Or try parent sharing
If you know someone with a schedule that fits in with your childcare needs - and vice versa - you could consider looking after each other’s children. Keep in mind, however, that you won't have the advantage of leaving your child with a trained professional.
Needless to say, it would be beneficial if you both have children of a similar age and live nearby to make this sort of arrangement work.
9. Explore flexible working options
Not all employers require you to work nine to five from the confines of the office, so have a chat with your boss to see if you can tweak your working hours.
You might be able to change your hours to fit around your partner and share childcare that way. Alternatively, you may be able to work from home for part of the week, though some employers will expect you to have childcare in place during any working hours.
Other options include going part-time, term-time only or doing a job share. The best one for you depends on how your salary balances against the amount you’d have to spend on childcare, and what options your employer is willing to offer.
Some employers have their own flexible working policy, so check your contract of employment or staff handbook, or speak to your line manager or human resources department.
10. Don’t forget about child benefit
It’s not childcare specific, but every little helps - child benefit payments from the government are intended to help with the maintenance of all children in the UK, and they can help ease the strain of childcare costs.
For the 2019-20 tax year, you’ll get £20.70 for your first child and an extra £13.70 a week for any additional children.
What’s more, unlike other childcare payments, you’ll be paid child benefit until your child turns 16 - or until they turn 21 if they’re in an approved form of education or training.
Child benefit is not means-tested. However, if you or your partner earns more than £50,000 a year, you’ll incur a tax charge on the money you receive, which has to be paid via a self-assessment tax return. If you earn more than £60,000 a year, you’ll effectively have to pay back all of the child benefit you receive.
Even so, it’s still worth registering and just opting out of the payments, as you’ll receive National Insurance credits while you’re off work.
Find out more: check how much you're entitled to and whether you're eligible to claim using our child benefit guide
11. Find cheap and free holiday activities
If your child is at school, the stretch of the six-week summer holiday can be a daunting prospect. Free summer holiday activities can help.
Check out the Family and Childcare Trust, which lists organisations in your local area, where you can find information about childcare and family services. There are often youth groups and community centres which offer some form of help during the holidays.
Super Camps is an Ofsted-registered holiday camp provider for kids aged four to 14 offering activities to keep kids occupied from £45 a day. It offers a mix of adventure and educational activities, plus specialist courses for adventure, cookery and Lego at 56 sites around the country.
Alternatively, Activate Camps could be good if your child is into sport. Activities through this scheme costs from £30 a day.
Both accept payment with childcare vouchers.
12. Check out local charities
Organisations such as the YMCA, local church groups or local authority play schemes could be good places to check for free after school clubs and classes.
They’re intended for parents who are unable to pick their children up after school, which can save a lot of money compared to a nanny picking up your child. But the services can be limited to only serving certain schools in the local area.
13. Find some willing grandparents
If elder relatives are retired, live nearby and are willing to help out, leaving a child in their care could save you a lot of money, and give them some valuable time to spend with their grandchildren.
If they’re not already retired and look after a child under the age of 12, they may qualify for National Insurance credits. This is particularly handy as the time spent caring will count towards their state pension eligibility.
Find out more: National Insurance and the state pension