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Childcare options

As a new parent, choosing childcare can be daunting. Here’s a summary of the different options available to help you decide which ones best suit your family’s needs and budget.

Using a registered childminder

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Someone who looks after children in their own home and is registered with one of the following:

Pros
  • They’re self-employed, so you don’t have to worry about paying their tax or National Insurance (NI) contributions.

  • As long as they’re registered, you might be eligible for help to pay for your childcare using Tax-Free Childcare. If you’re eligible for Universal Credit, you might be able to claim back up to 85% of the monthly childcare. Or you might be able to use childcare vouchers or claim the childcare element of Working Tax Credit. Find out more in our guide Working Tax Credit.

  • Many childminders work flexible hours and pick up/drop off children at school or playgroup.

  • You can use your 15-30 hours free weekly childcare allowance if you’re eligible.

Cons
  • You’ll need to make other arrangements if they’re ill or on holiday.

Choosing a day nursery

Day nurseries offer care and education for children aged six weeks to five years.

They might be run privately or by community organisations, local authorities or employers.

Pros
  • They’re usually open weekdays from 8am to 6pm, which fits most working hours.

  • Nursery fees are sometimes subsidised by local authorities or employers.

  • You can use your 15-30hours free weekly childcare allowance if your child is eligible.

  • You could claim the childcare element of Working Tax Credit to help with the cost – find out more in our guide on Working Tax Credit.

  • You can use childcare vouchers – find out more in our guide, Help with childcare costs.

Cons
  • They’re usually more expensive than childminders – see our guide Average childcare costs.

  • You usually have to pay the fees when you’re on holiday.

Employing a Nanny

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Someone who looks after a child in the child’s own home. It’s usually a live-in or daily role, but part-time nannies are also available.

Nannies can voluntarily register with Ofsted. 

Pros
  • Your child is cared for at home.

  • As long as they’re registered, you can use childcare vouchers – find more guidance on Help with childcare costs. Or you can claim the childcare element of Working Tax Credit – find out more in our guide on Working Tax Credit

Cons
  • You’ll be their employer, and responsible for paying their Income Tax and NI contributions.

  • As an employer, automatic enrolment means you’ll have to pay into a pension for your nanny if they are at least 22 and earn more than £192 a week (£833 a month) before tax (as of April 2020). Find out more information about the duties as an employer from The Pensions Regulator

  • You’ll need to make other arrangements if they’re ill or on holiday.

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A live-in au pair

What is it?

Someone who lives with you and learns the local language and culture while providing around 30 hours’ childcare and help around the home.

Pros
  • They’re paid ‘pocket money’ so the costs are much lower than other childcare options. See our guide Average childcare costs.

  • They’re usually treated like a member of the family rather than an employee, so you won’t have to deal with their tax or NI.

Cons
  • You can’t use childcare vouchers – find out what is available in our guide Help with childcare costs

  • You can't claim the childcare element of Working Tax Credit – find out more in our guide Working Tax Credit.

  • You’ll need to factor in the cost of their room and board on top of what you pay them.

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Using a playgroup or pre-school

What is it?

Community and voluntary-run care and education sessions for three to five-year-olds.

They usually offer a three hour morning or afternoon sessions during term time.

Pros
  • A low-cost option – see our guide Average childcare costs.

  • You can use your 15-30 hours free weekly childcare allowance if your child is eligible.

  • As long as they’re registered, you can use childcare vouchers – find out more in our guide Help with childcare costs. Or you can claim the childcare element of Working Tax Credit – find out more guidance on Working Tax Credit.

Cons
  • You’ll need to find alternative childcare to cover the school holidays and/or the rest of the day.

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A Sure Start Children’s Centre

Pros
  • A low-cost option - many of the services are free. See our guide Average childcare costs.

  • Because they’re a ‘one-stop shop’, you can also get advice on other things – for example, training and job opportunities.

  • You can use your 15-30 hours free weekly childcare allowance if your child is three or four.

Cons
  • Not all centres allow you to leave your child there all day.

Nursery school

An introduction to primary education for three to five-year-olds. They’re often attached to a pre-school or primary school. Open during school hours in term time.

Pros
  • They’re usually free if attached to a primary school.

  • Your child will be taught by qualified teachers.

  • You can use your  15-30 hours free weekly childcare allowance if your child is eligible.

Cons
  • You’ll need to find alternative childcare to cover the school holidays.

Relying on family or friends

There’s the option of having a family member or friend look after your child. This can be for free, payment or an arrangement where you look after each other’s children – this is called ‘reciprocal childcare’.

This might seem like a convenient and affordable option – but the rules around these arrangements can be complicated.

Pros
  • A family member doesn’t have to be registered with Ofsted if they’re providing free childcare.

  • If you pay a family member or friend for childcare you can use childcare vouchers – find out more in our guide Help with childcare costs. Or, you can claim the childcare element of Working Tax Credit – find out more in our guide Working Tax Credit. This is unless they’re a registered childminder and look after at least one other unrelated child.

Cons
  • Legally, you can’t use a friend to regularly look after a child under eight years for more than two hours a day during normal working hours unless they’re a registered childminder. This is something to think about if you have a reciprocal childcare arrangement.

Specified Adult Childcare credits

This scheme is aimed at family members – usually grandparents – who stop work to help look after a child.

They might benefit from it if they haven’t built up enough National Insurance (NI) contributions to qualify for the full state pension.

The carer might be eligible if they’re:

  • over 16, but below state pension age
  • related to the child. Grandparents are most common carers, but any family member can claim.

To be eligible, the child needs to be under 12 years old and the:

  • parent (or main carer) is entitled to Child Benefit
  • parent has a qualifying year of NI contributions they’re willing to transfer to the carer
  • parent (or main carer) agrees to the application. You might not agree if, for example, you’re not returning to work and need the NI contributions.

Applications for a particular tax year cannot be made until the following October. This  allows NI records to be up-to-date for the previous tax year.

Help with childcare costs

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

You don’t need to be on a low income to get help with childcare costs. There are lots of places to get help.

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Choosing the right childcare option

Demand for childcare places is high, so it’s never too early to start researching your options. 

Costs vary a lot depending on where you live, so it’s a good idea to find out what you can expect to pay in your area.

For UK and London averages, see our guide Average childcare costs.

You can work out whether the childcare you want is affordable by comparing the costs with your disposable income after essential outgoings.

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MoneyHelper is the new, easy way to get clear, free,
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Whatever your circumstances or plans, move forward with MoneyHelper.

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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