High demand for nannies is driving up costs, as impact of childcare shortages hits families

The cost of hiring a full time nanny has risen by 12 per cent in a year, according to new data.

With average childcare costs rising across the board (they've risen seven per cent in the last 12 months) and parents struggling to access free childcare spaces in their area, more and more families are turning to nannies to help look after their children.

New figures from nanny payroll and employment experts Nannytax show that the cost of hiring a full-time live-out nanny in the UK is £40,326 per year (or £3,361 per month). That's an increase of £4,342 (or 12 per cent) compared to the previous year. In London, nannies have seen annual pay increases of around eight per cent, and now cost an average of £3,852 per month or £46,228 per year.

• London: £17.78 per hour, £3,852 per month, £46,228 per year - up 7.89 per cent
• Home Counties & Greater London: £16.93 per hour, £3,668 per month, £44,018 per year - up 9.23 per cent
• Rest of UK: £15.51 per hour, £3,361 per month, £40,326 per year - up 12.07 per cent
  
  

Data based on 5,500 internal payroll records for the tax year 2023/24. Salaries are in gross terms and based on a live-out nanny working full time, 50 hours per week.

Kirsty Wild, nanny employment expert at Nannytax, says: “We are seeing rising demand for part-time nannies who can do wraparound care as more parents returning to offices find they can’t fit pickups and drop offs around their commutes. Meanwhile, the struggle to secure nursery places is pushing more parents to consider nannies as an alternative."

For parents concerned about the cost of nursery, especially if they have more than one child, nannies can prove a cost effective childcare option, as Kirsty explains: “For families with multiple nursery-age children, a nanny can work out cheaper than the combined nursery fees, because they don’t charge extra for looking after more than one child at a time." If you opt for a nanny, you may be able to take advantage of the tax-free childcare allowance - where for every 80p you add to your childcare account (which is used to pay for your childcare), the government will add 20p, up to a maximum of £500 every three months (£2,000 a year). Your nanny must be registered with the tax-free childcare scheme and be regulated by a body such as Ofsted, the Early Years Register or the Childcare Register.

As the demand for nannies grows, so is the scope for tasks they undertake, with parents looking for 'hybrid nannies' to help their families. Frankie Gray, founder and director of nanny agency franchise Harmony at Home, says: "Historically, nannies were just nannies, but now we’re seeing the rise of the ‘hybrid nanny’ who might also serve as a tutor, housekeeper, music teacher, sports instructor, special education needs specialist, or PA. The added value to families who can afford it is such that they are willing to pay more for nannies who can offer more than childcare. Roles for hybrid nannies make up around one sixth of all current vacancies.”

For more help with childcare costs, make sure you are claiming child benefit if you are eligible. Even if you don't want the payments, claiming has long-term benefits for your money.