How to cut the cost of childcare

New research from Turn2Us reveals that 22% of parents are worried about additional childcare costs over the summer holidays. Here are a few tips to keep them down.

Friends and family

Perhaps the most obvious childcare route is to get any willing (and available) family members or friends to look after your children. But if you are going to do this, you need to be careful.

Under the Childcare Act, anyone looking after your child for more than two hours a day before 6pm (or after 2am), or for more than 14 days a year, outside of the child's own home must be registered as a childminder. Under guidelines, this means the childminder must complete a criminal record check, learn first aid, take a childcare course, and pay an annual fee to Ofsted.

While this doesn't apply to close relatives of children – such as grandparents, siblings, aunts or uncles – it does apply to your next-door neighbour or your best friend.

One final point to note is that if you're part of a babysitting circle, you shouldn't need to register as a childminder because most babysitting takes place after 6pm. However, if you regularly babysit before 6pm, you will need to be registered. Babysitting should also be carried out in the child's own home. Similarly, sleepovers would be exempt, unless they occurred at the same address more than 14 times in a year.

As Ofsted only operates in England, this only applies to English families. Find out the rules for Scotland, Northern Ireland and Wales.

Childcare tax credits

If you work for 16 hours or more a week (if you're a couple, you must work at least 24 hours a week between you) and pay for childcare at the same time, you could qualify for the childcare element of Working Tax Credits to help you with your costs. (Note, this is not the same as Child Tax Credits.) How much you receive will depend on your household income - but if this is under £40,000, it's likely you'll be able to make a claim.

The childcare element of the Working Tax Credit can help you with up to 70% of your childcare costs, based on a maximum of £122.50 per week for one child, and a maximum of £210 per week if you're paying for two or more children.

To qualify, the childcare provider you use must be registered with Ofsted. You can find registered childminders via your local council.

Unfortunately, the tax credits system is incredibly complicated, so for an easy way to find out whether you qualify, use the Tax Credits calculator on gov.uk or call the tax credit helpline on 0345 300 3900.

Find out more by reading Working Tax Credit: am I eligible, how to apply and how to renew.

Childcare vouchers

Your employer may be able to help you with childcare costs using childcare vouchers.

These are part of a Government scheme which can save each working parent up to £624 each year in childcare costs for higher-rate taxpayers (£1,196 if you signed up before the rules changed on 6th April 2011), and up to £933 per year for basic-rate taxpayers.

The scheme allows parents to sacrifice some of their gross salary in return for vouchers which can be put towards the cost of childcare – this means you'll avoid having to pay tax or National Insurance on this amount.

Parents who are basic-rate taxpayers are allowed to receive a maximum of £243-worth of vouchers each month, higher-rate taxpayers up to £124 a month and additional-rate taxpayers up to £110 a month. Pretty much any form of registered and approved childcare can be funded with vouchers, such as childminders, day nurseries, registered nannies, breakfast and after school clubs and holiday clubs.

The downside is that if you receive these vouchers, it can affect the amount you receive in tax credits (if you're eligible). Fortunately there's a nifty calculator to help you decide whether you're better off having childcare vouchers or the childcare element of Working Tax Credit.

If you are better off having vouchers, it's well worth finding out whether your employer offers a voucher scheme – even if it doesn't, you could try to convince your employer to start one as it doesn't cost anything to set up, and could save your employer up to £227 per employee each year through reduced National Insurance payments.

Nanny sharing

Hiring your own 'Mary Poppins' to look after your kids at home can do some serious damage to your bank balance. But thanks to websites such as nannyshare.co.uk you can now share a nanny with another family!

This website allows you to search for families in your area that are also looking for childcare. Once you've done that all you need to do is hire a nanny and split the costs. It's that simple!

Au pairs

If your children are older, i.e. heading towards secondary school, and one or both of you works part-time or different shifts then an au pair could be an option. These are generally twentysomething students from other European countries who have come here to improve their English. As they are paid in 'pocket money', this can be a cheaper way of getting some help.

The drawbacks are they live in with you. They are also not qualified, so they should not be left to look after children for long periods of time. This is also contrary to the spirit of the arrangement. For more on au pairs, read Is an au pair a good way to cut the cost of childcare?

Holiday clubs

School holidays always come round quickly, so if you're looking for childcare during these holidays, it's well worth checking to see whether there are any holiday clubs at the school itself, or at local leisure centres or churches.

Some schools and nurseries will also hold after-school clubs during term time for working parents who can't pick up their kids at 3.30pm on the dot. To find out more about holiday schemes in your area, check with your local council.

Find your Family Information Service

If you're struggling to find a last-minute childminder or want more information on a family event going on in your area, find your local Family Information Service.

It'll give you loads of free advice and guidance on where to find children's centres, breakfast and after school clubs as well as all-important back to school information. You can track down your nearest Family Information Service through the Family and Childcare Trust.