Childcare costs and options

The cost of childcare takes up an increasingly large slice of the typical family budget. If you’re planning to return to work it’s essential to budget carefully for your childcare costs and claim all the help that’s available.

How much does childcare cost?

The average cost of sending a child under two to nursery in Britain is now £115 per week part time or £212 per week full time.

The cost of childcare varies depending on the type of childcare and your location in the UK. But some childcare is free.

The tables below give you an idea of how much different childcare costs if your children are too young to qualify for free early years education.

Part-time childcare costs

Type of childcare How much does it cost? (GB average) How much does it cost? (London)
Registered childminder (25 hours – for a child under 2) £104 per week £146 per week
Day nursery (25 hours – for a child under 2) £115 per week £152 per week
Part-time nanny (25 hours) £200-£275 per week including tax and National Insurance contributions  
Au pair (30 hours including babysitting) ‘Pocket money’ of around £70-£85 per week plus room and board.  

Source: Childminder and nursery costs from Family and Childcare Trust, 2015; Part-time nanny wages from Nannyplus.co.uk; Au pair pocket money rates from GOV.UK

Full-time childcare costs

Type of childcare How much does it cost? (GB average) How much does it cost? (London)
Registered childminder (50 hours for a child under 2 £197 per week £269 per week
Day nursery (50 hours for a child under 2 £212 per week £284 per week
Live-in nanny (50 hours) £360 per week, plus tax and National Insurance contributions, room and board £433 per week, plus tax and National Insurance contributions, room and board
Daily nanny (50 hours) £512 per week, plus tax and National Insurance contributions, room and board £616 per week, plus tax and National Insurance contributions, room and board

Source: Childminder and nursery costs from Family and Childcare Trust, 2015; Live-in and daily nanny wages from Nannytax.co.uk, 2014

Informal or free childcare providers

Type of childcare How much does it cost?
Playgroup or pre-school £5 to £10 per 3-hour session
Sure Start Children’s Centre Depends on your household income and some play sessions can be free
Nursery school Free if part of the state school system
Family arrangement Depends on the arrangement – sometimes free. If you intend to pay your family member for childcare you may not qualify for help with childcare costs
Shared childcare arrangements Technically free, but you’ll need to factor in loss of income – and you won’t get any money from the state to help

Source: Playgroup/pre-school costs from Netmums

Pros and cons of different childcare options

Registered childminder

Someone who works in their own home looking after children. Childminders are self-employed and many will work flexible hours and pick up/drop off children at schools and playgroups.

  • Childminders are self-employed, so you don’t have to sort out their tax or National Insurance contributions. You just pay the bill.
  • As long as your childminder is registered, you will be able to use childcare vouchers or claim the childcare element of Working Tax Credit.
  • You may need to sort out other care arrangements when they go on holiday or if they are ill.

Day nursery

Care and education from 6 weeks to 5 years. Nurseries may be run privately or by community organisations, local authorities or employers. They are typically open weekdays from 8am to 6pm throughout the year.

  • Nursery fees are sometimes subsidised by local authorities or employers.
  • You will be able to use childcare vouchers or claim the childcare element of Working Tax Credit.
  • Nursery overheads are generally higher, so they are usually more expensive than childminders.
  • You usually have to pay the fees even when you are on holiday.

Nanny

A nanny usually has a more formal live-in or daily role to suit the needs of you and your child. Nannies can voluntarily register with Ofsted.

  • Your child is cared for in their own home.
  • As long as your nanny is registered, you’ll be able to use childcare vouchers or claim the childcare element of Working Tax Credit.
  • You will be your nanny’s employer so you must deal with PAYE to collect tax and National Insurance on their pay.
  • You may need to sort out other care arrangements when they go on holiday or if they are ill.

As an employer, you will also be affected by automatic enrolment. This means you will have to pay into a pension for your nanny if they earn more than £192 a week (£833 a month) before tax.

Au pair

An au pair lives with you and learns the local language and culture while providing around 30 hours’ help with the children and around the home.

  • Much lower cost than other childcare options.
  • Au pairs are usually treated like a member of the family rather than an employee so you won’t have to deal with PAYE.
  • You won’t be able to use childcare vouchers or claim the childcare element of Working Tax Credit.
  • You’ll need to factor in the cost of board and lodging.

Playgroup or pre-school

Community- and voluntary-run care and education for 3-5 year olds. They typically offer morning or afternoon sessions lasting for 3 hours daily during term time.

  • A great low-cost option, if available.
  • You will need to find alternative childcare to cover the school holidays and/or the rest of the day.

Sure Start Children’s Centre

Children’s centres provide advice and support for parents and carers. Some also provide childcare for 2, 3 and 4 year olds. They are run by local authorities.

  • A good affordable option, if available.
  • Because they’re a ‘one-stop shop’, you can get advice on other things such as training and job opportunities.

Nursery school

An introduction to primary education for 3 to 5-year-olds and often attached to a pre-school or primary school. Open regular school hours during term time.

  • A great free option, if available.
  • You will need to find alternative childcare to cover the school holidays and/or out-of-school hours.

Did you know?

More than one in four families use grandparents’ care during term time.
Department for Education, 2014.

Source: Department for Education, 2014

Informal arrangements with family or friends

Using friends or family for childcare may seem like a good and cheap option but there are a few things you need to know before you decide to do this.

A family member doesn’t have to be registered by Ofsted if they are providing childcare free of charge.

The rules for friends providing childcare are different. Legally, you can’t use a friend to regularly look after your child for more than two hours a day during normal working hours if the child is under 8 years’ old unless your friend is registered by Ofsted as a childminder.

This is something to bear in mind if you were thinking of using a friend for informal childcare or even sharing childcare with a friend and looking after each other’s children on your days off (known as reciprocal childcare).

If you do pay, you won’t be able to use childcare vouchers or claim the childcare element of Working Tax Credit unless your friend or relative is a registered childminder and they look after your child and at least one other unrelated child in their home.

Help with childcare costs – vouchers and tax credits

You don’t need to be on a low income to get help with childcare costs. Financial help with childcare is available from:

  • Employers – in the form of childcare vouchers
  • The government – as the childcare element of Working Tax Credit or Universal Credit
  • Help from your employer with childcare costs
  • Tax credits and other help with childcare costs
  • The Tax-Free Childcare scheme (from 2017).

From September 2017, working parents of three and four-year-olds will be able to get 30 hours’ free childcare a week, worth around £5,000 a year per child.

Did you know?

An estimated 540,000 UK parents receive help with their childcare costs through employer-supported childcare schemes.

Source: Family and Childcare Trust, 2015

Working out the best childcare option

Of course, there’s much more to choosing childcare than how much it costs.

The right childcare also depends on your needs, the needs of your child and how much you can afford to pay.

Remember, it’s never too early to start working out and planning for the cost of childcare.

Demand for places is high and sometimes the only way to secure a childcare place is to register your child even before they are born.

Childcare costs vary a lot depending on where you live. It’s a good idea to find out what you can expect to pay in your area. This will give you a more accurate picture of how much you’re likely to have to pay.

Then to work out whether the childcare you want is affordable, you need to compare the costs with your income and essential outgoings in your household budget.