Childcare costs are crippling UK families

With childcare costs becoming more expensive than rent or mortgages in some cases, Kate Anderson takes a look at the help that is available for families.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

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Did you know that in the UK childcare costs account for 30% of an average wage? Therefore, it’s no wonder that a recent survey of 20,000 working parents found that 97% believe childcare in the UK is too expensive.

There’s no getting away from the fact that having children costs money. But does it really need to cost so much? Let’s investigate the average cost of childcare and the help available to families that are struggling.

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Average childcare costs

Here in the UK, the average cost of sending a child under the age of two to nursery part-time is £138 a week. If you’re sending them full-time, this goes up to £263 a week.

Part-time is considered 25 hours a week and full time 50 hours a week. Obviously, average prices depend on where you live in the UK. For those who live in London, full-time childcare costs climb up to £321 a week!

This is a large portion of anyone’s income – and these figures are just for one child. It’s why one-third of the survey respondents said they paid more for childcare than their rent or mortgage.

Help with costs

There are schemes in place to help families with the cost of childcare. However, most of these schemes don’t kick in straight away. It means that families have to find a way to fund childcare for the first few years of their child’s life.

Tax-free childcare

You can get up to £500 every three months (up to £2,000 a year) for each of your children. If your child is disabled, this figure increases to £1,000 every three months (up to £4,000 a year).

Basically, for every £8 you pay into your childcare account, the government will pay £2. This money can then be used to pay your provider. However, you can only use it to pay for approved childcare: childminders, nannies, nurseries, after school clubs and play schemes.

Free childcare for two-year-olds

There are some circumstances where you can get free childcare for your two-year-old if you live in England. Your eligibility depends on your income support status or whether your child has special education needs.

You can head to the gov.uk website to check out whether you are eligible.

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Free childcare for three- to four-year-olds

Families of children aged three to four in England can get 570 free hours of childcare per year.

It is usually taken as 15 hours a week for 38 weeks of the year. But there is the option to take fewer hours over more weeks.

Some children will also be eligible for 30 hours of free childcare a week. However, the way the system works means you may not always be better off taking that option. So it could be worth using the government’s childcare calculator to see what this option means for your finances.

The important thing to be aware of when it comes to free childcare hours is that this doesn’t cover all costs. You may find that your childcare provider charges wrap around fees. Or you might need to pay for things like meals, nappies and trips.

Tax credits

Help is also available in the form of tax credits. Depending on your circumstances, you may be able to claim Child Tax Credit or Working Tax Credit.

Take home

There’s no getting away from the fact that childcare costs in the UK are extremely high.

While free childcare is available once children are three years old, before that point, families are largely left to cover it themselves. And with childcare costs having grown four times faster than wages in England in recent years, lots of families are beginning to feel the strain.

Budgeting before your baby arrives and having a childcare plan in place can remove some of the financial pressure. But it’s also important to make use of any schemes that are available to save you money.

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