Jan 16

Slash your childcare costs

Reading Time: 14 mins

Childcare is a huge financial burden for most families and never more so than in the long summer holidays. But there are options that don’t have to cost the earth. The Moneymagpies have compiled a comprehensive guide for working parents with a run down of all your childcare options as well as a host of top tips to help you cut costs throughout.

We’ve started with the cheapest option, as we see it, and carried on up the scale, when it comes to costs, showing how you can do things cheaper with each type of care.

Mum and Dad

Cost £0 – your agreed payment

This is probably the cheapest form of childcare you can get. If you’re lucky enough to have parents nearby who are willing and able to help with the kids, at least some of the time, then you’re definitely quids-in.

Grandparents provide £3.9 billion of childcare every year and it is estimated that three in ten are of working age. This means that while they are providing their families with greatly appreciated help, they are losing out on working to pay National Insurance contributions and therefore qualifying for a state pension.

But from April 2011, grandparents and other adult family members providing childcare are entitled to National Insurance credits (just as a stay-at-home-mum would) toward their basic State Pension, meaning they will be rewarded for this role like any other job.

The kids under care must be aged 12 or under and they must be cared for 20 hours or more per week.

The amount of help that grandparents and other relatives like aunts and uncles give is being recognised so the government want them to benefit just like in any other caring job. This is why the scheme came about in the 2009 Budget.

How does it work?

Currently, you cannot claim online, as HMRC are still working to ensure this method of application is secure. The form you need instead is called TC600. You can get one by phoning 0845 300 3900 or text phone 0845 300 3909 and ask for it to be sent to you in the post, fill it out and then send it back to them.

Instead of claiming childcare tax credit all you have to do is put on the form that the grandparents will be looking after the kids.

They’ll need dates of birth and national insurance numbers for both grandparents as well as your child’s date of birth. The form will have to be signed by both you and one grandparent.

Once it’s all filled in and you’ve sent the form back, Her Majesty’s Revenue and Customs (HMRC) will check all the info you’ve given them against pension records, to see whichever named grandparent has a full basic state pension.

The credit scheme will stop either once the grandparents are no longer caring for the children, or the children have reached the age limit of 12.

How can I cut costs?

It is up to you and your relatives to reach an agreement on payment for the care of the children. But as this is not professional care, any payment should always be less than if you were paying for a childminder, nanny or nursery to take care of the kids, as these will all have professional qualifications.

If you feel it is only right for your relative to receive some sort of payment but they won’t accept it, the easiest thing to do will be to contribute towards activities, days out and food for the children. Treats for the kids are also treats for the folks so pay for them all to go swimming, to the cinema or to activity centres for one afternoon, instead of a coughing up a full wage.

And of course there are lots of things children can do with their grandparents that don’t cost anything, like going for picnics, visiting the park and learning to play balls games!

Child Minders

Who it’s right for: Parents who want their babies and children under 8 years old cared for in a home environment


Cost: No national rate but most childminders will charge between £2.50 and £5 per child per hour for full-time care depending on where you live.

IMPORTANT: It is illegal for anyone to care for a child under the age of 8 in their own home for more than two hours a day without being registered, unless they are a blood relative of the child.


If you don’t have family to help you and none is offered by your children’s school, then child minders are the next on the list.

One advantage of using a childminder is that they work from their own home and may well have children themselves. The amount of children they are allowed to care for at any one time is set by the National Childminding Association so that childminders don’t look after more kids than they can handle and all children get more focused care and attention.

So your kids get to mix with other children in a homely environment and enjoy the kind of activities you would usually do with them in your own home.

All potential childminders are inspected by OFSTED to ensure they have a suitable home for the care of children and inspections continue throughout their childminding career. The childminder and anyone in the home over the age of 16 undergoes a CRB check to ascertain they are no threat to children cared for there.

Many childminders will have childcare qualifications such as an NNEB, GNVQ or BTEC in Childcare and Education. If they haven’t got previous experience in childcare, they are still required to complete an introductory course in childcare and first aid when they start out.

How can I find a Childminder?

To find an Ofsted inspected, registered childminder in your area, the National Childminding Association says the first thing to do is ask around. Nothing sells a childminder better than a good reputation amongst other families.

If you get no luck from word of mouth, the search facility on ChildcareLink will provide you with the names of registered childminders – as well as day nurseries, playgroups and preschools – closest to where you live.

In order to get specific information on childminders vacancies in your area you’ll need to contact your local Families Information Service. Search through lists for England, Wales or Scotland and contact your local service by email or telephone to let them know what you’re looking for in order to receive a list of childminders you can contact.

As well as letting them know what days and hours you need your child cared for, you should also state whether you need any specific requirements – such as a childminder who is located close to a train station or who does not have dogs, for example. This will make it a lot easier for you as you will receive a list that only includes those who have your special requirements.

You can also visit and search for available child care in your area. All you need to do is sign up as a parent and enter your postcode to search for childminders. The site will then return the results of signed up childminders closest to you. When you sign up, you’ll also be given the option to enter any specific requirements you are looking for in a childminder.

You can then view the childminder’s profile which includes a personal ‘About me’ section, their qualifications, any vacancies they have and whether they are a smoker. It may also disclose information on their fees. You need to sign up to the site as a parent looking for childcare in order to view the childminder’s contact details.

How can I cut costs?

For a lot of parents, the use of a childminder may only be for a couple of hours a day before or/and after school, until you can pick them up on your way home from work. With these hours at a minimum it keeps costs down and your bank balance happy.

If you need a childminder all day however, there are a few things that can keep the cost down.

Firstly, you can send your child with their food for the day – breakfast, lunch and maybe even dinner, depending on your working hours. As the childminder will not be providing the food and therefore not paying for it, you should be able to get a cheaper rate. Don’t forget snacks, bottles, bibs and baby wipes for your child as well. The more you provide yourself, the less you should have to pay.

Secondly, many childminders will offer a reduction in childcare if they look after more than one of your children – sort of a ‘pay for one, get one half price’ deal. Of course, all childminders vary but if they are guaranteed an income from two children at once it saves them looking for another child to fill their vacancy, so they may offer a discount.

Also, the longer your children are with a childminder, the more you are likely to get for your money. If you are happy with your childminder then don’t change them! Just as your child will become attached to the childminder, the childminder will become attached to your child and will more than likely be willing to do more with them.

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After-school clubs, breakfast clubs & holiday playschemes

Cost: from £5-£11 for each session – privately run clubs may cost more

Who it’s right for: Parents working long hours with children of schooling age

Loads of schools and nurseries are giving that extra bit of care to help out busy families leaving you free to get quickly to and from work, to bring home the bacon. And by 2010, all schools will be able to offer a range of extra services including study support, childcare (in primary schools) and parenting and family support, which will make it a lot easier to find clubs for your child to attend.

Breakfast clubs are for those early birds who work longer hours or commute slightly further. The club will give the opportunity for children to eat together before school and ease into the day. Kids can be dropped off from around 7.30 and stay there until the start of their lessons.

Afterschool clubs have always been a fun way for kids to spend the afternoon until you are able to pick them up, for little or no cost. They are usually open from the end of school to around 6pm.

Holiday playschemes are there for kids whose parents still have to work during their school holidays! These can be found at local leisure centres and there are companies that specialise in holiday activities that use local schools as their base.

How can I find one?

Your first port of call is to enquire at your child’s school to see what additional services they provide. Failing that, ask at other local schools as some may offer their services to pupils of other schools and provide a pick up service.

The best place to start is asking your schools administration if they can recommend anywhere but if you need to find a registered group near you and your school doesn’t have or know of one, go to Childcarelink.

Put in your town or postcode in the search engine provided and click on Childcare Search from the results. The search options you get will be all different types of childcare but tick the “Out of School Care” box. Click away and the results it’ll give will be a list of the clubs in your area.

* WARNING there can be long waiting lists for clubs. It’s best if you can to try and look ahead of the dates you have in mind for your little ones to start and put their name down. Speak to other parents and pop along to the clubs you like the look of to have a chat about how to register a place and if there is a waiting list. If you need a place straight away there’s the choice of ticking the “immediate vacancies” box on the Childcarelink website which will only produce search results with places available now.

How can I cut costs?

Some after school groups take the children to and from the group. If you’re worried you won’t have time to get up there to drop them off you should ask if this is a club feature. If not, maybe there are other parents in your area whose children are at the same group with similar concerns, who want to share the cost and responsibility of the pick-up?

If you can spare a morning or afternoon a week, maybe the club needs a helper? You could help in exchange for a discount in charges.

Are there trusted friends with children who live near to you? You could take it in turns to have your (small) tribe of kids at each other’s houses twice a week, before or after school depending on what suits you all with your own commitments. As well as an official breakfast/afterschool club it would easily help keep cost down.

Similar groups run in holiday time offering a wide variety of activities and day trips, allowing children to play together and make more friends. This is more expensive, between £9- 25 per day but will take the pressure off friends and relatives.


Cost: Bed and food from £60-90 per week in cash

Who it’s right for: Parents who work and can’t take time off in the holidays

A good au pair is worth their weight in gold for child minding over the summer holidays, if not for the rest of the time. Au pairs will cost you in food and board, but these are certainly less noticeable costs than paying out to a nursery every month.

Au pairs are usually aged 18- 25 years old from all over Europe and have come to the UK to see the sights, improve their English, as well as pitch in with your laundry and walk the dog. They will not necessarily be formally trained in childcare but allow them to slot into family life and it’ll be a great experience for all involved.

How do I find an au-pair?

In this country au pair schemes are not government run but are privately owned agencies regulated by stringent Home Office guidelines. The Home Office dictate that au pairs should work a maximum of five hours a day, five days a week and must have two free days per week. An agreement between you and your au pair should be made about what is best for the kids routine, you and the household.

If you want to find an au pair through a government regulated agency, go to the directory of British Au Pair Agencies Association (BAPAA) on the website here and click on one of the agency links. You can choose an agency in the countries you would like your au pair to come from.

There is also the Au Pair Association (IAPA). They give great advice on being a host family.

The London agency, Top Notch Nannies provides au pairs as well as nannies, including male au pairs who, they say can be particularly good for families with older children, especially boys, who would like an energetic and lively companion.

Because the agencies are businesses there will be a member’s fee, registration fee or placement fee in finding the right au pair for you. This can be anything between £25-150. Always read the terms and conditions for each agency as whilst they’re probably pretty similar by nature there may be unique hidden costs and stipulations in individual contracts.

WARNING! The BAPAA strongly advise:

“Always use a reputable and established au pair agency. Newspaper, internet advertisements or one of the many web-based matching services may appear to be acceptable and inexpensive alternatives for securing an au pair placement. There are, however, potential risks in arranging a placement in this manner.”

It is up to the organisation the exchange is made through, as well as your own discretion to have the au pair or any professional childcare CRB checked to ensure the safety of your household and children.

How can I cut costs?

An au pair is a real bonus if your kids are of school age. They can prepare them for school and look after them afterwards. Plus, they are a budget friendly and convenient way of sharing the burden of your domestic pile up.

Something else to get for your money is language lessons for the kids (and for you too). If your au pair speaks another language then your children have the opportunity to become bilingual.

Do be careful not to overload your au pair. They tend to be reasonably young themselves, won’t be trained in childcare necessarily and at first, the language barrier could be a problem.


Cost: £65 per day – £152 pw (that’s more than £7,900 a year) is the average cost for full-time place for a child under two. For London based crèches expect to pay much more.

Who it’s right for: Working parents with children of pre-school age.

Picking a nursery is a really stressful business and can be a complete minefield. Probably more so than any other sorts of childcare because it’s a place your child will spend a lot of time. You need to be completely sure that they’ll be happy and confident it’s worth the cash you’re shelling out.

What’s great about nurseries are that they take pre-school age children and that’s brilliant for you if you’re returning to work sooner than you thought.

Staffing ratios are always age appropriate, they should be:

  • Under two: 3:1,
  • Two-year-olds 4:1
  • Three to seven-year-olds: 8:1

Provision will be made for extra staff if there’s need. Like when there are a lot of younger babies on the premises, and then the ratio should be around 2:1.

How can I find a Creche/Nursery?

The first stop is your work. Do they have a crèche? Speak to your manager or get info from human resources. Your company could be linked with a specific nursery or crèche where you could get a discount.

If not then apart from word-of-mouth recommendations from other Mums and Dads, go to Childcaredirectory and click on the map for your part of the country, then click on the quick links to narrow it down to your area. The results will be what’s available in the neighbourhood and the contact details.

If the Childcare Directory website doesn’t have what you want, again there’s also searching by your postcode using – the bible for searching for all types of childcare!

How can I cut costs?

The cost can be wildly different from place to place, as can the services offered, so you should shop around. However, as is often the case, you’ll generally get what you pay for.

You may be able to find a place in a state nursery but these are scarce.

If you have more than one child you’ll have to pay for both but quite often a discounted rate will be available for siblings joining the same nursery so always ask. Don’t forget that you can typically expect meals to be included in the price, so you will be saving on food costs (and a bit of time) at home.

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Cost: definitely not the cheap option at £240-400 pw net

Who it’s right for: Parents with no time and a bit of cash to throw around.

Nannies are trained, experienced and skilled people who make a career from caring for kids – they may know more than you do about taming the little monsters and keeping them entertained! (look at Super Nanny).

But, you get what you pay for and for top class nannies, you’ll pay top dollar. A nanny’s weekly wage might not be dissimilar to your salary or your partner’s.

As you’re employing the nanny, you’ll be responsible for sorting out their tax and national insurance contributions.

How do I find a Nanny?

Again, you can’t get better than a word-of- mouth recommendation but this may be difficult to come by and if a family has found a nanny they’re happy with its unlikely they’ll want to let them go.

So the way forward to finding your very own Mary Poppins is by a reputable agency (who will charge a fee for using them). There are scores of nanny agencies on the web but if you contact The Recruitment and Employment Confederation they can provide details of reputable nanny agencies in your area. Call them on 0207 009 2100 or email

Agencies are responsible for vetting their employees and checking they have the relevant experience, qualifications and references. Always check that this has been done.

Phone up the agency you like the sound of for a chat about your requirements. They’ll understand any anxieties you have about hiring a nanny as they’ve seen it all before!

How can I cut costs?

If you and a friend are both on a tight budget as well as a tight schedule, you can consider sharing a nanny. This will split costs down the middle and should provide enough childcare for both families.

Whilst it’s a massive saving on paying the full whack yourself, it’s still not as piggy-bank friendly as other forms of childcare.

Leading nanny agency, Top Notch Nannies, has developed some top tips to help parents reduce the cost of hiring and keeping a nanny, without compromising on safety.

“If parents treat nannies properly and with respect they can often keep them for longer, thus cutting down on the cost of re-hiring,” says MD Jean Hughes. “We’ve known many cases where nannies have stayed for years with families that didn’t pay top dollar but treated them fairly and with love.”

Nanny salaries have risen sharply over the last few years as demand has greatly outstripped supply, and even now, with City redundancies having a knock-on effect on domestic help, top nannies are still able to pick and choose their employers.

“There’s still a shortage of really good nannies,” says Ms. Hughes, “and parents cannot afford to be complacent. It is far cheaper to keep the same nanny for years than to have to re-hire once or twice a year.”

It’s for this reason that Top Notch Nannies has produced a free fact-sheet for new clients called ‘The Joy of Nannies – The Top Notch Guide to Hiring and Keeping your Nanny’ (please see PDF file below). The fact-sheet will be sent out to all new clients registering with the agency but it can be sent to anyone who rings the agency on:

020 7824 8209 or email them at

Childcare vouchers – save £2,000 per year

Childcare Vouchers can be used to pay for all different forms of childcare, including most types in this article. Loads of employers offer a voucher scheme as part of the employment package to make paying for childcare easy.

How do they work?

Vouchers can be offered to you as a bonus on top of your salary, but more widespread is the “Salary Sacrifice”. That means you take an agreed (and contracted) cut in pay and get the rest directly in childcare vouchers. From 6 April 2005, the first £50 a week or £217 a month, supplied via childcare vouchers is exempt from tax and National Insurance Contributions (NIC) for employees, so you only pay tax on your reduced salary, saving you money!

For example a two parent family could save around £1600 if in the lower tax bracket or even £2000 in the higher tax bracket. Both parents are eligible to claim.

Independent companies such as Accor, are usually brought in to regulate these voucher schemes. Rightly so, such companies won’t provide vouchers for unregistered childcare. It’s all about ensuring the proper safety guidelines are met and people have the correct qualifications.

Talk to your work and see what they have to offer. If they don’t do a voucher scheme, maybe you could be the one to introduce it to them?

* WARNING Childcare vouchers are a fantastic way to save money but they aren’t for everyone. HMRC say that if you can answer yes to both of the following you shouldn’t bother with them:

  • You are receiving tax credits of more than £545 per year (or £1090 per year if you have a baby aged under one) and you are claiming for your childcare costs.
  • Your eligible childcare costs are no more than £175 per week if you have one child or £300 per week if you have two or more children.

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Further reading:

Clegg pledges funding to help poorest children succeed;

Robert Khamo
Robert Khamo

Thanks for the information… I actually like this blog. I bookmarked this post and will unquestionably be making a return visit.

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