5 ways to cut childcare costs

From January 2013, more than a million families on 'higher' incomes will receive less child benefit. Even now, however, the high cost of childcare often makes it pointless, from a financial perspective, for both parents to work. Recent figures from the Resolution Foundation indicate that some 30% of an average family’s income is spent on childcare, with parents of pre-school children paying at least £5,000 per year for 25 hours of nursery per week. Here, we highlight five ways that parents can reduce their childcare costs.

Claim childcare vouchers/tax credits

Childcare vouchers, which enable you to pay for childcare out of your gross (pre-tax and National Insurance) income, could cut your childcare costs by more than £1,000 a year.

Your kids must be under 16 to qualify, while it is also only an option if your employer offers the scheme.

The benefits can be huge, though. Say you 'sacrifice' £1,000 of your annual salary to buy childcare vouchers. That money would only be worth about £700 after tax, but will buy you a full £1,000 of vouchers – meaning that you save £300.

Childcare tax credits are also designed to help working parents cover the cost of childcare, with families with a household income of £42,000 or less being the main recipients.

You may still qualify if your household income is above this amount though, so it’s worth checking by calling the tax credit helpline on 0845 300 3900. Just be aware that claiming childcare vouchers could affect your eligibility.

Every week, Clare Francis, financial journalist and editor of comparison site moneysupermarket.com will offer tips and advice on all things money-related to help iVillagers make the most of their hard-earned cash. From energy bills to car insurance; credit cards to children’s savings accounts; mortgages to discount vouchers Clare will show you how to make sure you’re getting the best deal.

See also:
- 5 ways to cut home insurance costs
Change your working hours

The more time you can spend at home with your child, the less costly childcare you will need.

And as of 2009, every parent with a child under the age of 16 has a right to ask their employer for more flexible working hours.

If you work full-time, it is therefore worth asking your employer if you could work more flexible hours to enable you to spend more time caring for your child. This could, for example, involve finishing work at 3pm to pick up your child from school and then making up the two to three hours lost by working from home after your child has gone to bed.

See also:
- 5 ways to cut home insurance costs
Ask a relative or friend

You cannot expect those close to you to provide free childcare, but you may find that relatives such as grandparents are happy to take on some responsibilities.

Another option is to swap a day with a friend or neighbour who also has children. If you are lucky, you may even be able to work out a childcare rota with a number of other parents in the area. This works particularly well if several of you work part time.

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- 5 ways to cut home insurance costs
Take advantage of after school and holiday clubs

Courses and activities offered by local schools, churches and sports centres are a great way to entertain older children on the cheap.

Check out notice boards and websites, and ask other parents, to find out what is happening in your local area. Even if clubs take place at another local school to the one your child attends, he or she may still be able to go along.

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- 5 ways to cut home insurance costs
Consider sharing a nanny

The cost of hiring a full-time, live-out nanny is around £400 a week. However, they are more flexible than nurseries and can be a cost-efficient option if you can find say three of four other families with which to share the costs.

An increasing number of families are therefore turning to specialist sites such as Nannyshare.co.uk, which matches local families with similar needs. A six-month subscription costs £25 and includes the creation of your family profile and one free job posting.

For more information on the Child Benefit changes that take effect in January, click here.

See also:
- 5 ways to cut home insurance costs
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