We use cookies to allow us and selected partners to improve your experience and our advertising. By continuing to browse you consent to our use of cookies. You can understand more and change your cookies preferences here.

6 ways to save on childcare costs this summer

Are you eligible for free childcare?

A third of parents in Great Britain are stressed out by arranging childcare for the school holidays, a recent poll by YouGov revealed – and more than half admitted looking forward to their children returning to school in September.

The biggest headache is likely to be cost, with full-time holiday childcare averaging out at £138 per week, a study by children’s charity Coram Family and Childcare found. For an eight-week holiday, that means paying £1,104 – and it will likely cost you even more if you live in the South-East, South West or London.

But the prospect of organising childcare doesn’t need to be overwhelming. There are a number of government schemes and initiatives to take advantage of, which could help reduce the financial pressure.

Here, we take a look at six schemes which could cut the cost of your childcare.


1) Apply for tax-free childcare

Tax-free childcare is a government scheme that gives working parents a 25% top-up on their childcare costs.

It’s only valid for children under 12 years of age, or 17 if they are disabled.

To get on the scheme, you’ll have to open an online account to pay for childcare with a registered provider on the system. There are over 68,000 providers to choose from, including childminders, nurseries, nannies or after-school clubs.

You’ll have to sign back into the scheme every three months to confirm your details are up to date.

Who’s eligible?

To be eligible for this payment, you must be in work or receiving parental leave, sick leave or annual leave. You have to earn at least the national minimum wage or living wage for 16 hours a week.

How much could you get?

For every £8 you pay in, the government adds an extra £2, up to £2,000 a year for each child. This means you could earn up to £500 every three months for each child, or £1,000 if your child is disabled.

Find out more: tax-free childcare: everything you need to know

2) Use up your childcare vouchers

The childcare voucher scheme allowed parents to pay for childcare for under 16s through salary sacrifice. You buy vouchers out of your pre-tax salary, effectively saving on the cost of income tax and National Insurance.

To use the scheme, you must have signed up before 4 October 2018 and work for an employer who still offers it. You also can’t continue claiming childcare vouchers after you start claiming tax-free childcare.

Who’s eligible?

Any working parent whose employer offers the scheme.

How much could you get?

The amount of childcare vouchers you can buy a week varies depending on your tax band.  The table below shows how many vouchers each parent can buy and the maximum tax saving that could be made per year for basic-rate taxpayers

Tax-band Max vouchers per week Max annual tax saving (basic-rate)
Basic rate £55 £930
Higher-rate £28 £624
Top-rate £25 £590


Find out more:
 how do childcare vouchers work?

3) Sign up for free education for two-year-olds

This initiative offers childcare for the term after your child’s second birthday, finishing the term after their third birthday.

You can get up to 15 hours a week of free childcare, with an approved childcare provider, for 38 weeks a year.

Who’s eligible?

To be eligible for the scheme you must be living in England, have a child of two years and in receipt of one of the following benefits:

  • Income support
  • Income-based jobseeker’s allowance Income-related employment and support allowance
  • Universal Credit: if you and your partner (if you have one) have a combined working income of less than £15,400 a year after tax
  • Tax credits: and you have an income of less than £16,190 before tax
  • The guaranteed element of state pension credit
  • The working tax credit four-week run on
  • Support through part 6 of the Immigration and Asylum Act.

You could also be eligible if your child is:

  • Looked after by a local council
  • Has a current statement of special needs, or an education, health and care plan
  • Gets disability living allowance
  • Has left care under a special guardianship order, child arrangements order or adoption order.

How much will you get?

You don’t get paid but will benefit from free childcare services.

4) Get up to 30 free hours of childcare for three and four-year-olds

All children in the UK aged three to four are eligible for 15 free hours of childcare, with a registered childcare provider, for 38 weeks a year.

Who’s eligible?

You must be living in England with a child aged between three and four to be eligible for the scheme. You may be entitled to 30 free hours if you or your partner are in work and earn at least the national minimum wage or living wage.

How much will you get?

You don’t get paid with this scheme but are able to benefit from free childcare services.

5) Get the working tax childcare element

The childcare element of working tax credit is designed to help working parents on low incomes pay for childcare, to help them stay in employment.

Who’s eligible?

Both you, and your partner if you have one, must work at least 16 hours a week. If one of you is not working, it must be because you’re incapacitated, in hospital, in prison or entitled to carer’s allowance. 

How much will you get?

You can get paid up to 70% of what you pay for childcare, up to a maximum of £175 per week for one child, or £300 a week for two or more children.

Find out more: working tax credits – the basics 

6) Apply for universal credit

Universal Credit is the government’s new benefits model which is being rolled out across the whole of the UK. It will replace your tax credits and other income-related benefits.

Who’s eligible?

You have to already be eligible to claim the main element of Universal Credit to qualify for the childcare element.

Both you and your partner (if you have one) must be in work, unless one or both of you have limited capability for work, regular and substantial caring responsibilities for a severely disabled person or are absent in prison, hospital or residential care.

How much will you get?

You’ll get 85% of your childcare costs covered up to a maximum of £646.35 per month for one child, or £1,108.04 for two or more children.

Find out more: how Universal Credit is calculated

Back to top
Back to top