A recent survey by insurance company LV= showed that the average child costs its parents £201,809 from birth to its 21st birthday. One factor in that vast-sounding bill is the cost of childcare. However, there are a number of ways to reduce this burden. Use any free care there is on offer to keep your bill as low as possible. Then get all the help you can to pay for the rest.
The cheapest childcare out there is, of course, you. So ask your employer if you can have more flexible working hours. Since last year anyone with a child under 16 has the right to ask for flexible arrange-ments, although your boss can say no if there is a genuine business reason.
Flexible working comes in many forms. You could work part-time, or come to an arrangement where you compress your hours into fewer days, but receive the same salary. Alternatively, you could ask for staggered working hours so that yourself and your other half can split morning and afternoon care when your children are at school.
Other free care becomes available when your child turns three. From the term after their birthday they are entitled to at least 12 hours of free nursery education a week. This can be taken either in the form of morning or afternoon sessions at a local nursery, or via a day-care service that offers the Early Years Curriculum. You may be able to have the free hours knocked off your overall childcare bill.
Once you’ve got your bill as low as possible, look to the government initiatives designed to help with the rest. Parents who each work more than 16 hours a week, but earn less than £58,175 a year com-bined, are entitled to extra tax credits to help cover childcare costs – as long as your child is left with someone who is registered with Ofsted. Tax credits can also help with up to 80% of your childcare bill.
Another option is childcare vouchers, available to any working parents, regardless of income, as long as your employer is registered for the scheme. It is a salary sacrifice scheme where you can swap up to £243 a month of your pre-tax salary for vouchers. If you’re also eligible for tax credits, note that the number of vouchers you claim can affect tax-credit entitlement. To see if vouchers or credits will leave you better off, try this government calculator.
However you go about all this, bear in mind that cuts are coming. There’s a chance neither tax credits at higher earning levels, nor vouchers, will survive them.