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Slash your childcare costs

MoneyMagpie team 18th Sep 2019 2 Comments

Reading Time: 15 minutes

Childcare is a huge financial burden for most families, even more so in the long summer holidays.

There are, however, options available that don’t have to cost the Earth. We have compiled a comprehensive guide for working parents, including a run-down of all the options that are open to you. We’ve also included some top tips to help you cut childcare costs throughout the year.

We’ve started with the cheapest option and carried on up the price scale, offering money-saving tips wherever we can.


get help from Mum and Dad

Slash your childcare costs

Cost £0 – your agreed payment

If you’re worried about childcare costs, this is probably the cheapest form you can get. If you’re lucky enough to have parents nearby who are willing and able to help with your children, at least some of the time, then you’re definitely in an easier position financially speaking.

Grandparents provide £7.3 billion of childcare every year and it’s estimated that four 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. Therefore, they won’t contribute as much to their own National Insurance pot and thus their state pension could suffer.

Under new legislation, 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 children under their care must be aged 12 or under and they must be cared for 20 hours or more per week to qualify.

The amount of help that grandparents and other relatives, like aunts and uncles, provide is now starting to become recognised, so the government wants them to benefit just like anyone else working in care would.

How does it work?

The official name for this is Specified Adult Childcare credits. It essentially works by transferring the National Insurance credit from the original claimant of Child Benefit over to the carer, who in this case is the grandparents. That is why it is only available to those who have claimed Child Benefit, because otherwise there can be no NI transfer.

This isn’t restricted to grandparents; plenty of other family members can also apply. You can read more about the scheme at this link here.

how do I apply?

Previously, the form used to apply for this was the TC600. If you haven’t got a computer or aren’t particularly tech savvy, then you can get a hard copy posted to you by calling 0845 300 3900 or texting 0845 300 3909.

However, the system has been updated so that you can now apply online for the Specified Adult Caregiver Credit.

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

They’ll need dates of birth and National Insurance numbers for each grandparent 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 childcare costs?

It’s up to you and your relatives to reach an agreement on payment for the care of the children. 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 children, as these will all have professional qualifications.

If you feel it’s 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 children are also treats for the grandparents; so pay for them all to go swimming, to the cinema or to activity centres for one afternoon, instead of a paying them an agreed wage.

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



Slash your childcare costs

the basics

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’s 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.

how does it work?

If you don’t have family to help you and your children’s school offers no help, 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. This is so that childminder’s don’t look after more children than they can handle and all children get equal focus, care and attention.

Another benefit of a childminder is your children will get to mix with other children in a safe environment and enjoy the kind of activities you would usually do with them in your own home.

health and safety

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 DBS 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?

ask around

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

childcare link

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

family information service

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 childcare.co.uk and search for available childcare 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.

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 childcare 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.

send your child with their food for the day

Prepare a packed breakfast, lunch and maybe even dinner, depending on your working hours. As the childminder will not be providing the food, it will not be something they can charge for. This way you should be able to negotiate a cheaper rate. Don’t forget snacks, bottles, bibs and baby wipes for your child as well. The more you provide yourself, the more you can reduce your childcare costs.


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 are different, but if they can secure a guaranteed income from two children at once, it saves them looking for another child to fill their vacancy, so they may offer a discount.

if you find a good one, keep them

The longer your children are with a childminder, the more you’re likely to get for your money. If you are happy with your childminder then do what you can to keep them. Just as your child will become attached to the childminder, the childminder will become attached to your child and over time this mutual attachment will be beneficial to you as a parent.


After-school clubs, breakfast clubs & holiday play schemes

Slash your childcare costs

the basics

Childcare costs: 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. Allowing parents to time to get to and from work. Schools should 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

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. Children can be dropped off from around 7.30am and stay there until the start of their lessons.

Afterschool clubs

Afterschool clubs have always been a fun way for children to spend the afternoon after school, until you’re able to pick them up. As they are part of the school, they offer their services for little or no cost. They are usually open from the end of school to around 6pm, giving the parents time to finish their working day and drive home.

Holiday play schemes

Holiday play schemes are there for children whose parents still have to work during their school holidays. These can typically be found at local leisure centres, but there are also 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 asking is your schools administration staff, to see if they can recommend any of the above schemes. The next best thing is searching on Childcare Link.

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.

be prepared

There can be long waiting lists for clubs. It’s best to try and work out the dates you will need so you can put their name down early. Pop along to the clubs you are considering to ask about how to register and if there’s a waiting list. If you need a place straight away, try ticking the “immediate vacancies” box on the Childcare Link website to refine your search.

How can I cut childcare costs?

Some groups take the children to and from the group, which can be perfect if you’re pressed for time. If not, maybe there are other parents in your area whose children are at the same group. Have a chat one day to see if any might 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 children 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/after school club it would easily help keep costs 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.


the basics

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 childminding 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 childcare 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, unlike abroad, au pair schemes are not government run. Instead they 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 children routine, you and the household.

Because the agencies are businesses there will be a registration fee or something similar to pay at some point. This can be anything between £25-150. Always read the terms and conditions for each agency. Whilst they’re mostly pretty similar, there may be unique hidden costs and stipulations in individual contracts.

Although most au pairs are female, the London agency Top Notch Nannies suggests that male au pairs can be particularly good for families with energetic older boys.

the british au pair agencies association

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.

“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 DBS checked to ensure the safety of your household and children.

How can I cut childcare costs?

An au pair is a real bonus if your children are of school age. They can prepare them for school and look after them once school has ended. 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 children (and for you too). If your au pair speaks another language then your children may have the opportunity to become bilingual.

However, do be careful not to overload your au pair. They tend to be:

  • Quite young and inexperienced
  • Untrained in childcare (in terms of formal qualifications)
  • Less than perfectly fluent in English (often taking up the role in order to improve their language skills)


Nurseries and Crèches

Slash your childcare costs

the basics

Cost: £65 per day – £152 per week (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 at time 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’ll 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 is they take pre-school age children, which is convenient if you’re returning to work sooner than you thought.

How can I find a Creche/Nursery?

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

If not, then after asking around for word-of-mouth recommendations from other parents, try searching Childcare directory plus your location to find what’s in your area.

If the Childcare Directory website doesn’t have what you want, also try searching your postcode using Childcare.co.uk – the bible when searching for all types of childcare.

How can I cut childcare 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 nursery but these can be hard to come by and may be subject to a waiting list.

If you have more than one child you’ll have to pay for both, but you may be able to get a discounted rate 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’ll be saving on food costs (and a bit of time) at home.



Slash your childcare costs

the basics

Cost: definitely not the cheap option at £240-400 per week 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 children. They may know more than you do about taming the little monsters and keeping them entertained! (Just 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. After all, if a family has found a nanny they’re happy with it’s unlikely they’ll want to let them go.

So the way forward is to find your very own Mary Poppins from 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 [email protected]

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

top notch nannies

This leading nanny agency 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’. The fact-sheet will be sent out to all new clients registering with the agency. You can also request it by ringing the agency on 020 7824 8209 or emailing [email protected].


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 help ease the payment of childcare costs.

How do they work?

Vouchers can be offered to you as a bonus on top of your salary. Alternatively, 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 NI contributions. So you only pay tax on your reduced salary, saving you money!

For example a two-parent family could save between £1,600 and £2,000, depending on the tax bracket. Both parents are eligible to claim for help with childcare costs.

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?

but they’re not for everyone

Childcare vouchers are a fantastic way to save money but HMRC advises against it for some. 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 claiming for your childcare costs.
  • Your eligible childcare costs are no more than £175 per week for one child or £300 per week for two or more children.

Useful links

  • Top Notch Nannies
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13 years ago

Further reading:

Clegg pledges funding to help poorest children succeed;

Robert Khamo
Robert Khamo
14 years ago

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

Jasmine Birtles

Your money-making expert. Financial journalist, TV and radio personality.

Jasmine Birtles

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