What are the average childcare costs in the UK?

With average childcare costs rising in the UK we explore the different options - and their costs - for working parents

Group of small children having meal at nursery
(Image credit: Getty images)

Average childcare costs in the UK are soaring. A new study (opens in new tab) shows that the cost of childcare for parents with children under two has increased by more than £2,000 a year since 2010.

Data from the Trades Union Congress (TUC) shows that of working parents with pre-school children, one in three now spend more than a third of their wages on childcare. According to the OECD, the UK now has the second highest childcare costs among leading economies.

It’s not just nursery fees that are rising. The cost of employing a nanny has soared since the pandemic according to a recent study.

Annabelle Williams (opens in new tab), personal finance specialist at Nutmeg, says: “The cost of childcare continues to rise and it’s heaping further pressure on families already burdened by the high cost of living. Childcare is an essential outgoing for many families, it’s not something that can be easily cut from the household budget.”  

While you might benefit from the tax-free childcare allowance (opens in new tab), be entitled to child benefit or qualify for 30 hours free childcare each month (opens in new tab), it’s still important to understand how much you’re paying and how it compares to the average costs in the UK.

What are the average childcare costs in the UK?

The average childcare costs in the UK depend on the type of childcare you choose. This could be nursery, childminders, nannies or au pairs. Here we compare the average costs of each.

Typical cost per month (part-time based on 25 hours a week)Typical cost per month (full time – 50 hours)
Nursery£601£1,169
Nanny£1,040£3,300
Nanny share£520£1,650
Childminder£539£1,028
Au pair£390£390

Nursery

A popular option for childcare is nursery. The TUC study says nursery fees for under 2s have risen by £185 a month – or £2,200 a year.

The average annual nursery bill for a family with a child under 2 was £4,992 in 2010. In 2021, it had risen to £7,212 – an eye-watering increase of 44%.

The TUC estimates that parents – with children under 2 – have to work 9.4 hours a week on average just to be able to cover 25 hours per week of childcare at nursery. This is up from 8.7 hours per week in 2010.

Childminder

Parents can opt to use a childminder, where like nannies, they have the responsibility of picking the children up or dropping them off at their different settings. However childminders would take your child or children back to their own home and work on a self-employed basis.

The average cost of a childminder is £123 a week, according to Coram Family and Childcare.

Nannies

There are alternatives to a nursery and childminders, however. Many families choose to hire a nanny who will look after your little one or ones at your home, prepare meals and take children on outings and to any classes should you wish. It can be more flexible, but you’ll pay for that personal service. 

Nanny salaries have soared since the pandemic, with wage expectations from professionals seeking work up a fifth since 2020 alone, according to a recent study by agency Harmony at Home.

Wages vary but its latest figures suggest a full-time nanny will cost up to £42,000 a year – that’s £3,500 a month. This is the top end that you would likely pay in London. But it’s still far more expensive than a place at a nursery in most cases.

To cut the cost of hiring a nanny you could look at a nanny share. Joining forces with like-minded parents living nearby can be more cost effective as the weekly cost could be cut by 50% if you share the exact same hours of childcare.

Online companies such as childcare.co.uk (opens in new tab) and tinies.com (opens in new tab) can help arrange a sharing service. You can use one of these sites to tap in your postcode and find a match with a local family also looking to share the childcare costs. Typically you’ll alternate with the other family in terms of which home the children are based in during the day.

Personal finance specialist Annabelle Williams highlighted that anyone who takes on a nanny to look after their children at home must be prepared for becoming an employer. “Regardless of whether it’s an informal arrangement or through an agency, or whether the nanny is live-in or live-out, you become their employer,” she says. “As such there will be obligations on your part.”

You will be responsible for including statutory sick pay, maternity pay and a pension. You will also need to prepare a contract of employment which should spell out all the terms and conditions of the employment including hours, duties, benefits such as holidays, and wages.

Au pairs

Hiring an au pair is one of the least expensive childcare options. Au pairs are young people from outside the UK who live with you, as part of your family and cares for the children. In return they get free accommodation, meals and some pocket money – rather than a salary – around £90 a week. 

There will be other expenses, as your au pair will be staying in your home adding to energy bills. You’ll also need to pay your au pair’s share on family outings. If you have a spare room in your home and wouldn’t mind sharing it, this might be for you.

This option could get more expensive in the future. In March, the Government said it would push through new legislation saying au pairs will be entitled to the minimum wage. At present, families are exempt.

Is a childminder cheaper than nursery?

A childminder can be cheaper than nursery, depending on where you live and the hours of childcare you need. 

According to Coram Family and Childcare, a childminder costs £124.41 a week. Some childminders may offer a discount if they are caring for more than one of your children. Yet you may find that childminders charge more if you live in an area where there’s high demand.

Crunch the numbers once you’ve got prices for your area and see what’s most cost-effective and what works best for the family.

Childcare costs for older children

Once children are at school, life can be easier for parents. Though there’s still a gap between when school finishes and the end of the working day. Schools typically offer after-school clubs which differ in length and cost. 

According to the Coram Family and Childcare, the average weekly price for families using an after-school club for five days a week is £66.52 a week, or £288.25 a month. Alternatively the average cost of a child minder until 6pm is £71.39 a week, which equates to £309.35 a month. While the school option is cheaper, clubs might not run as late as 6pm so it still might be necessary to use a childminder to fit in with working hours.

Cost per month (five days a week)
After-school club£288.25
Childminder£309.35

SOURCE: Coram Family and Childcare

What’s the cheapest childcare option?

There’s no one-size-fits-all cheapest option with childcare because every family will need their children cared for on different days and for varying numbers of hours. 

Annabelle Williams, personal finance expert, says: “In an ideal world families would be able to have their kids cared for in the environment that suits their children best, but because fees for childcare are so high in Britain usually the decision is made by finely balancing what’s affordable and what works best for the children.

“Crunch the numbers for the different options – nurseries, playgroups, local childminders or having a nanny at home and think about which would be the most affordable and most suitable, factoring in your working hours, where the childcare is located and what might suit your child’s needs.”

The ages of your children will make a difference too as this will impact on the overall cost as some children might qualify for some hours of free childcare (see below).

To find childcare near you and compare prices, use the Coram Family and Childcare finder tool (opens in new tab).

It’s worth bearing in mind that the best cost-effective nurseries often get snapped up fast, so you should have your child on a waiting list as soon as you can.

It’s also worth trying to find free childcare by enlisting the help of family – usually retired grandparents – who might be happy to give up spare time to look after your children. This is mostly only viable where grandparents live nearby and there’s a good relationship between you all. Don’t forget that your relative will need time off too.

You might also entertain the idea of grouping with another family and working out a system where you can look after each other’s children.  You’ll need to find one with a child around the same age, a similar approach to parenting, and the same need for affordable childcare.

If you take them for one day each, you get two days of childcare for the price of one day off work. If you work part-time, this could be ideal.

What support can I get to cover childcare costs?

There’s help from the government for childcare once your child reaches three. Parents of three- and four-year-olds get up to 30 hours of free childcare per week in school term time.

This works out as 38 weeks of the year and you can claim 30 hours as long as you or your other half don’t earn more than £100,000 a year for hours with an establishment from Ofsted’s childcare register. This includes childminders, day nurseries, playgroups, pre-schools and nursery schools, but the hours cannot be used for care with a nanny.

Be prepared for some costs, however, as nurseries are allowed to ask for payments to cover the cost of things such as snacks, lunch and extra-curricular activities, for example music classes. 

Remember that not all nurseries participate in the government free hours scheme, so check before you sign up to any nursery at childcarechoices.gov.uk. This also flags any voluntary charges. 

If you claim benefits such as income support or universal credit, there might be more help available to you earlier on. You may be able to claim 15 free hours for your two-year-old. This also applies if your children have a statement of special educational needs or are looked after by a local authority. 

You could put child benefits towards the cost of childcare. The government will pay £21.15 per week for your first child and £14 per week for any children after that.

Since 2013 the benefit has been capped so households where one earner makes more than £50,000 start to lose some entitlement. If they earn £60,000 you don’t get anything.

However, it can be worth signing up for child benefit even if you are not entitled to it because signing up will earn you national insurance credits that will be important for your state pension if you are not working. 

If so, you should register for it then not claim the money so you can still claim the credits. 

You can also use the tax-free childcare allowance as a tax-efficient way of paying for nursery or the nanny. You pay money into the online account and the government adds a top-up to the account. You can then use the account to pay any childcare provider on the government's approved list, which includes childminders, nurseries, nannies, after-school clubs and play schemes. 

For each 80p that you pay into your childcare account, the government will pay in 20p. The top-up is capped at £2,000 per child, per year and £4,000 per child, per year if they are disabled.

Holly Thomas is a freelance financial journalist and writes across all areas of personal finance, specialising in investments. Holly’s work can mainly be seen in The Times, The Sunday Times and the Daily Mail. Previously she worked as Deputy Personal Finance Editor at The Sunday Times, Money Editor at the Daily/Sunday Express and also at Financial Times Business. She has won a number of professional awards, most recently Investment Freelance Journalist of the Year at the Aegon Asset Management Media Awards in November 2021. Others include Freelance Financial Journalist of the Year at the Headlinemoney Awards.