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How To Cut The Cost Of Childcare

07/01/2013

How To Cut The Cost Of ChildcareHow to cut the cost of child care

Purse Strings: You needn’t kiss that hard-earned career goodbye once you become a parent, as there are a few ways that you can cut the cost of child care, says Kara Gammell in Telegraph Wonder Women's weekly money advice column.

Child care vouchers

For parents whose income is too high to be eligible for tax credits, child care vouchers may be an alternative if your employer offers them. With these vouchers, the money is taken out of your income before tax and National Insurance and can be used to pay for Ofsted-Registered child care.
And the savings can be considerable. For instance, the maximum a basic-rate taxpayer can save annually is £930. If you have been in a child care voucher scheme since before April 2011 and are a higher or additional-rate taxpayer, you can save even more, £1,225 and £1,516 respectively.
However, newer entrants to voucher schemes face a tougher regime. While basic-rate taxpayers are allowed to buy £243 worth of vouchers every month, higher and additional-rate taxpayers can take less (£124 and £97 respectively), which limits their gains. The maximum annual gains for new entrants paying higher or additional-rate tax are £620 and £600 a year respectively.
Once you have received the vouchers, you can use them to pay for any Ofsted-registered child care for children up to 15, including some summer holiday clubs. You can also set them against some independent school costs, including boarding school fees.
As with most things, some types of child care are cheaper than others. For instance, professional nannies and some expensive day nurseries will be more costly, while an au pair will set you back substantially less, provided you can provide room and board.
Childminders, who are self-employed and look after your children in their own home instead of yours, fall somewhere in the middle. Bear in mind that your nanny or childminder is Ofsted-Registered, you can use child care vouchers which could reduce your spend.

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By Kara Gammell,
Personal Finance Reporter
8:30AM GMT 07 Jan 2013


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