Average childcare costs

Childcare costs can take up a large chunk of your family’s income, so if you’re planning to return to work after having a baby, it’s essential to budget carefully and claim all the help that’s available. Here are some of the main things to consider when it comes to the impact of childcare costs on your personal finances.

How much does childcare cost?

Childcare is an important aspect of raising children, and it can be a significant expense for many families. The cost of childcare in the UK varies depending on several factors, including:

  • the type of care;
  • location;
  • age of the child; and
  • hours of care needed.

According to the National Childbirth Trust (NCT), the average cost of childcare for a child under two years old in the UK is currently £138 per week for part-time care (25 hours) or £263 per week for full-time care (50 hours). However, these figures are just averages, and the actual cost of childcare can be higher or lower depending on your individual circumstances.

When it comes to full-time childcare, there are a variety of options available for parents to consider including:

  • registered childminders;
  • day nurseries;
  • live-in or daily nannies; and
  • informal or free childcare.

Each option comes with its own set of advantages and disadvantages, as well as varying costs. For example, if you work full-time and pay for childcare, you may have more income and career opportunities. However, you’ll also have less time with your children and may need to pay for childcare, which can be expensive. On the other hand, if you stay at home you’ll be able to care for your children. But, you’ll also have no income coming in or career progression during those years.

PensionBee’s Carer’s Pension Gap report reveals how care moments, such as having children, can impact pension savings. One finding was that for every missed year of paid work, the loss to a pension pot’s an estimated £5,000, on average.

Part-time childcare costs

Working parents may require part-time childcare services on certain days or for certain hours. Additionally, part-time childcare can be less expensive than full-time childcare, which may make it a more feasible option for families on a tight budget. Here are the average costs of part-time childcare options:

  • A registered childminder for 25 hours a week for a child under two is £124.41 in the UK or £172.12 in inner London.
  • A day nursery for 25 hours a week for a child under two is £138.70 in the UK or £183.56 in inner London.
  • A part-time nanny for 25 hours a week is typically between £250-£400, plus tax and National Insurance contributions.
  • An au pair costs around £90 a week, plus room and board.

Full-time childcare costs

Some parents may choose full-time childcare because they work full-time and require someone to care for their children while they’re at work. Parents may also prefer full-time childcare because it provides their children with more opportunities to socialise with their peers. Here are the average costs of full-time childcare options:

  • A registered childminder for 50 hours a week for a child under two is £237.28 in the UK and £344.10 in inner London.
  • A day nursery for 50 hours a week for a child under two is £269.86 in the UK and £368.73 in inner London.
  • A live-in nanny for 50 hours a week ranges from £350 to £650 - plus tax, National Insurance, room and board.
  • A daily nanny for 50 hours a week ranges from £400 to £650 - plus tax, National Insurance, room and board.

Informal or free childcare

In the UK, families have choices for early years education and childcare including playgroups or pre-schools which may offer free education for children aged two to four years old. They provide a safe and supportive environment for children to socialise and learn. Children can participate in activities like arts and crafts, music, and storytelling.

After school club costs

Free community activities run by volunteers or charities are great for kids to learn new skills. Activities include sports clubs, drama groups, and music lessons.

After-school clubs are available for kids aged four to 11 and can be run by schools or private providers. The cost varies depending on the provider, with the UK average being £66.52 per week. The Education Endowment Foundation estimates the cost at £7 per session per pupil, while the government’s figures show the average cost in 2021 was £62.13 per child per week. Fees range from £8 to £15, but low-income families may be eligible for free or reduced-cost options.

Holiday childcare costs

Holiday childcare can come from different sources, such as clubs, camps, childminders, nannies, or free arrangements. The average cost of holiday childcare in Great Britain in 2022 was just over £148 per week, but Universal Credit can cover up to 85% of the actual costs for eligible families.

This means one child can receive up to £188.90 a week, while two or more children can receive £323.85 a week. Tax-Free Childcare can also help pay for holiday childcare costs. Through Tax-Free Childcare families can receive up to £2,000 a year per child - or £4,000 if their child is disabled - to put towards the cost of childcare.

Find out more on The Pension Confident Podcast

Wondering how raising children impacts your personal finances? Listen to episode 19 of The Pension Confident Podcast and hear from our guests as they discuss wills, life insurance, pension beneficiaries and more. You can also watch the episode on YouTube or read the full transcript.

If you’re interested in learning more about looking after family members, what to do when expecting a baby, or family problems like illness, divorce or bereavement, head to our Family and Care section.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Last edited: 06-04-2024

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