Calculate the true annual cost of childcare after government-funded hours and Tax-Free Childcare. Covers all age groups including the 2024 expansion to 9 months for working parents.
Last updated: April 2026
Your childcare details
Most nurseries are open ~48–50 weeks. Term-time only: ~38 weeks.
UK average 2025: £6–£9/hour outside London. London: £8–£14/hour.
Tax-Free Childcare
Childcare cost summary
Net annual childcare cost
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Gross annual cost -
Free funded hours saving -
Tax-Free Childcare saving (20%) -
Monthly cost -
Cost as % of UK median salary -
Understanding childcare costs in the UK
The UK has some of the highest childcare costs in the developed world relative to average earnings. Full-time nursery for a child under 2 costs on average around £14,000 per year nationally, rising to over £20,000 in London. This represents a significant financial burden for families, often exceeding the net income of the lower-earning parent after tax - creating the so-called "childcare trap" where it can appear financially irrational for the secondary earner to return to work.
The funded childcare entitlement (England)
The government has significantly expanded funded childcare hours in England from April 2024. Working parents of children aged 9 months to 2 years are now entitled to 15 funded hours per week (38 weeks per year, or equivalent stretched over more weeks). Working parents of 3 and 4 year olds can access 30 funded hours per week. All 3 and 4 year olds receive 15 universal hours regardless of parental employment. These funded hours reduce costs significantly but do not cover full-time childcare - most parents still pay for additional hours, meals, and consumables on top. Note: Scotland, Wales, and Northern Ireland have different provisions.
Tax-Free Childcare
Tax-Free Childcare (TFC) allows eligible working parents to receive a 20% government top-up on childcare costs - for every £8 you pay in, the government adds £2, up to £2,000 per year per child (£4,000 for disabled children). The account is administered through NS&I and the money can be used at Ofsted-registered childcare providers. Eligibility requires both parents to be working (or one working and one unable to work due to disability), each earning at least the National Minimum Wage equivalent for 16 hours, and each earning less than £100,000 per year.
Frequently asked questions
Yes, these are separate schemes and can be used together. Funded hours reduce the number of chargeable hours you pay for. Tax-Free Childcare then provides a 20% top-up on the remaining costs you do pay. You cannot use Tax-Free Childcare and Universal Credit childcare support at the same time - if you are on UC, the UC childcare element (which covers 85% of eligible childcare costs) is usually more generous.
If you are on Universal Credit and in work, UC can cover up to 85% of eligible childcare costs - significantly more generous than Tax-Free Childcare for families on lower incomes. The maximum covered is £1,014.63/month for one child and £1,739.37/month for two or more children (2026/27 rates). You pay upfront and claim back through UC. The main condition is that both partners in a couple must be working (or have limited capability for work) to claim childcare costs through UC.
Childminders typically charge slightly less than nurseries in the same area and offer more flexibility on hours. However, childminders look after a smaller number of children (typically no more than three children under 5 including their own) which can feel less stimulating for older toddlers. Nurseries offer more structured activities and peer interaction, and some parents find the greater continuity of staffing in a nursery provides more stability. For very young babies (under 12 months), many parents prefer the home environment and lower ratios of a childminder. Cost per hour is typically similar, though childminders may charge a retainer for holiday periods.