Written by: Toni Foot
Comparing the cost of childcare and choosing the appropriate option can be a daunting task. Not only do you have to be sure that your child will be happy and well cared for, but you have to consider the financial implications of childcare. For many parents this is one of their biggest expenses and for some the cost of childcare outweighs the benefits of working at all. Here are some financial considerations when choosing childcare:
In order to provide the staff and facilities needed to accommodate a large number of children nurseries have high running costs, which are inevitably passed on to the parents (often around £45-50 per day, per child). You will probably also find that you are expected to pay for childcare regardless of attendance (due to holidays or sickness). If you work irregular hours or shift patterns you may find that you have to pay for far more childcare than you actually need.
As a registered provision, you may be able to use tax credits or childcare vouchers (a scheme provided by employers enabling parents to pay for childcare before their wages are taxed, potentially saving you hundreds of pounds each year) to help you pay for nursery care. Most nurseries also receive funding for children aged 3 – 5 years, meaning you can get up to 15 hours care free per week (some children are also eligible to get funded places at age 2).
Just like nurseries, childminders are required to be registered and inspected by Ofsted. They are legally required to meet the same educational and safety requirements as other registered providers. However, a childminder works from their home which means that their costs are not as high as a nursery, so their fees can be lower too (often around £35-40 per day). They can also be more flexible with their fees, potentially offering childcare that accommodates irregular working hours or holidays.
As registered providers you can use tax credits and childcare vouchers to help cover the cost of childcare. Some childminders are accredited to provide funded places for 3-5 year olds and eligible 2 year olds in the same way as a nursery, although not all childminders offer this.
Nanny or Au pair
A nanny or au pair can be a great option, particularly if you have several children as you pay them a flat fee rather than per child (usually around £70-80 per day). You can also share a nanny with another family, reducing the cost further. A person caring for children in the children’s own home does not need to be registered with Ofsted, as long as they do not care for children from more than two families at any one time.
If your nanny or au pair is not registered with Ofsted, you will not be able to use tax credits or childcare vouchers to help with the cost of childcare. However, they may choose to voluntarily register with Ofsted if you wish to make use of these options.
As an employer, you are responsible for ensuring your nanny’s tax and National Insurance contributions are made appropriately, and you will probably be required to provide sick/maternity pay along with other benefits all employees are entitled to (depending on the amount you pay them). See the HMRC website (http://www.hmrc.gov.uk) for more details.
Grandparents (or other family members) can be a fantastic option as you and your child are familiar and comfortable with the person caring for your child and there is no cost involved. Grandparents may be thrilled to be a
regular part of their grandchildren’s lives and thrive on their time together.
Although there is no monetary issue here, you may find you have other problems with this arrangement. However, elderly grandparents may struggle to keep up with the demands of your children on a regular basis, especially if the children are very young or if there is more than one. Some parents find relying on family to be unreliable if other factors are involved (such as other grandchildren or their own work commitments).
To get the best out of this arrangement, try to discuss what you both want to happen before the childcare starts. Also, you could try splitting the childcare between grandparents, or sending your child to a registered provider for some days and grandparents for others.
Family members are not eligible to register as childcare providers so you will not be able to use tax credits or childcare vouchers if you wish to pay for their help.
If you are lucky enough to have a friend who is able to share childcare with you, this can provide an excellent arrangement for you both. Providing no money (or equivalent such as vouchers) is exchanged, there is no need for registration or inspections. See the Ofsted guidance on registration if you are unsure whether your arrangement is exempt from registration: http://www.ofsted.gov.uk/resources/factsheet-childcare-childminding-between-friends
As you are not paying them, you are not an employer either so you don’t have to worry about things like National Insurance payments. This option is therefore FREE which is great for your pocket! Do take care in choosing this option though; you must be sure that your friend will provide childcare that you are happy with and that they are reliable enough to enable you to attend work regularly.