3 ways to save money on nanny childcare costs
We explore our top 3 ways to save money on your nanny childcare costs, from Tax-Free Childcare to sharing a nanny with another family.
1. Tax-Free Childcare For Nannies
Tax-Free Childcare is a government financial support scheme to help families with their childcare costs. If you qualify for the scheme and your nanny is Ofsted-registered, you can receive up to £2000 per year, per child under 12 (under 17 if disabled), to help pay your nanny’s salary.
Tax-Free Childcare works through an online childcare account that both you and the Government pay into. For every £8 you pay into the account, the Government will top it up by an extra £2 (up to a cap of £2,000 per child, per year and up to £4000 for disabled children). You can use this account to pay your nanny.
2. Nanny Shares
A nanny share is an arrangement where two or more families employ the same nanny.
By sharing the nanny, you can split the cost of the salary – however note, each family must pay at least national minimum wage which varies on the age of the nanny. As of tax year 2022/23, the minimum wage for a nanny age 21-22 is £9.18 per hour and age 23+ is £9.50 per hour. Please note, the National Minimum Wage is reviewed yearly and you should always consult the most up-to-date Rates & Thresholds.
How much you can save depends on how many shared hours your nanny works.
It has been reported that if you share your nanny for 25 hours per week you could reasonably save £5000-6000 per year.
3. Nanny is more cost-effective than Nursery for 2+ children
A nanny is often considered more expensive than a nursery. However, the cost-saving benefits of a nanny become apparent if you have more than one child.
Why? A nanny charges by the hour and the cost does not go up (or only rises a little) for additional children.
This means the cost for a full-time nursery place per child can be more expensive for families with 2 children or more.
How can Nannytax help?
Many of our Nannytax customers use Tax-Free Childcare. Our subscriptions team can advise you on how you can set this up to pay your nanny from your Tax-Free Childcare account.
We also have many nanny share customers. If you need help with setting up the payroll for your nanny share, Nannytax can set up the payroll for each employer by implementing a tax code split.
