Everything you need to know about childcare costs

When it comes to childcare, there are a number of different available options to consider and it can be a very personal choice. But it's no secret that childcare isn't cheap, so we've crunched the numbers and run through the options to help you make the best decision for you, whatever your situation.

1. Childminder

A registered childminder takes care of your child in their home (the childminder's not the family's). They are registered with the relevant local children’s services authority, like Ofsted in England, or the Care and Social Services Inspectorate in Wales. In total, they can look after six children at a time.

The cost of a full-time registered childminder (50 hours) is about £215 a week on average across the UK. In London, this typically rises to about £280 per week.

You may qualify for help with these costs via the “childcare element” of Working Tax Credits. This is a means-tested benefit to help with baby costs for working parents on low incomes and can be as much as 70% off childcare costs. You can also use childcare vouchers and, if your child is aged 3 or 4, you can use your free weekly childcare allowance. Because childminders are self-employed, you don’t have to pay their tax or national insurance contributions.

2. Day nursery

A day nursery takes care of and educates children aged from 6 months to 5 years. They are usually open from 8am to 6pm, providing all-day or half-day care.

If you prefer the idea of a day nursery, you will probably have to pay slightly more than with a childminder. The average weekly full-time (50 hours) fee in the UK is about £230, rising to £305 in London. For part-time care (25 hours), the average UK cost is around £120, rising to £165 in London.

You may also qualify for help to cover day nursery costs via the “childcare element” of Working Tax Credits, you can use your free weekly childcare allowance too, up to 30 hours a week. Occasionally fees may be subsidised by local authorities and even some employers.

3. Nanny

Nannies are typically the most expensive childcare option as they are considered your employee and work in your home. Some nanny positions are live-in roles whereas others are not.

Average weekly nanny costs across the UK are anything between an approximate £430 and £715. But, as the employer, you must pay your nanny’s income tax and national insurance contributions. If you pay your nanny over £10,000 per year you'll also have to contribute to their pension under the new auto-enrolment rules. This adds an extra cost on top of the rate you pay.

Depending on your preferences you might also have to add on the costs of their room and board. Part-time nanny costs range from £260 to £430 as well as income tax and national insurance.

4. Au pair

An au pair is usually aged between 17 and 27, and has no dependants. They must be a foreign national or come from the EU. They live with your family in the UK and help take care of your child for around 30 hours per week. In exchange, you must provide room and board, pay a stipend of around £70 to £90 per week, and help your au pair learn about British culture.

An au pair can be a great option if you only need part-time help and would be interested in welcoming a young foreign national into your family for an extended period of time. As the stipend you pay is more like “pocket money” for a family member, you don’t pay tax on income or national insurance contributions. Au pairs don’t qualify you for any help in the form of childcare vouchers or Working Tax Credit childcare help.

5. Family and friends

Many parents ask family and friends to help take care of their children. It can help parents feel more comfortable knowing that their child is in the care of someone they know and trust, but it has its disadvantages.

Depending on what you agree, it may be free. But, if you choose to pay a family member or friend, you might not qualify for help with costs. It is also worth keeping in mind that a friend must be a registered childminder to be able to take care of a child under eight years of age for more than two hours per day during normal working hours.

To be able to claim for help under the “childcare element” of Working Tax Credits, the family member or friend must be a registered childminder and look after at least one other unrelated child.

Wrapping up

From these five options, there is a lot to think about if you’re considering which childcare option is best for you. Things like total cost and amount of financial help you’re entitled to might help form your decision. As well as the money aspect, the option that best suits your own particular circumstances, like your working hours, can go a long way toward helping you decide the best childcare option for your family.

And whatever option you opt for, you may also qualify for the Tax-Free Childcare Scheme, if both parents are working.