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There are many different childcare options available today and prices can vary enormously. For some a day nursery is the best option while others might be more comfortable having a childminder look after their children. Just what is the difference and what will each option mean to your finances?
All 3 to 4-year-olds in England are eligible for 570 hours of free early education or childcare per year. This usually breaks down as 15 hours each week for 38 weeks of the year. You can claim for the childcare on either the 1st January, 1st April or 1st September AFTER your child turns 3. For more information see the gov.uk website.
So, what are your options?
A Day Nursery
Nurseries take children from the age of six weeks to five years. They can be private, community, local authority or employer run and usually operate all year round between the hours of about 8am to 6pm.
If your company runs a nursery you will probably find this is subsidised so well worth investigating. Generally nurseries are a more expensive option as they have higher overheads than childminders. You will also probably be liable for fees even when you are on holiday you so you will need to budget for this especially as you only receive the free early education allowance for 38 weeks of the year.
You can sign up for the childcare voucher scheme through your place of employment and this will save you some money too.
A registered childminder will usually look after a number of children in their own house. They are self-employed and will undertake a range of duties including taking children to and from school and to playgroups.
Make sure you choose a registered childminder so you can still use childcare vouchers and claim the childcare element of Working Tax Credit.
The disadvantage of a childminder is that it’s just one person so if they are on holiday or fall ill you will need to make alternative arrangements.
With the rising costs of childcare a nanny is no longer only something the very wealthy can afford. For many people, especially those working irregular hours, it is a sensible option.
A nanny will either live with you or will come to your home during the hours needed. You are employing them so you will need to deal with PAYE for the tax and National Insurance on their pay.
As with a childminder you will need to make alternative arrangements if they go on holiday or are unwell.
It would be a good idea to read more about hiring a nanny on the gov.uk website as there are tax / pension implications.
An Au pair
An Au pair is usually a foreign student who will live with you while learning the language. You will usually get around 30 hours help a week from them with children and around the house. This is probably more suitable for those with school age children who need someone to do the school run / shopping / general household chores.
You usually pay an Au pair ‘pocket money’ and cover the cost of food and lodging so this is a cheaper childcare option than most. Unlike a nanny they are not technically your employee so you don’t have to deal with the complicated tax implications.
You will not, however, be able to use childcare vouchers.
Pre-school / playgroup
These are usually community run and offer both morning and afternoon sessions of around three hours during term time. These are a great option for people who do not require full or part time childcare and the cost is usually covered by the free childcare education allowance.
Working parents will, however, need to make alternative arrangements for the rest of the day and for holidays.
Some primary schools now have nursery schools attached and these are open during school term time hours. You might find availability limited but if you can get a place these are a great free option.
Family and friends
Many people rely increasingly on family and friends to help with childcare and this can be a very good option. There are, however, things you should consider.
You cannot legally ask a friend to look after your child on a regular (more than two hours a day) basis unless they are a registered childminder.
As long as you are not paying your family member they do not need to be registered with Ofsted.
You should start thinking about your childcare options in plenty of time before you are due to return to work because there is a lot of competition for good places and you might find your options limited.
For more information about how we can help arrange a quick loan to help you in any unforeseen circumstances related to childcare costs please see our frequently asked questions.