Navigating the minefield of paying for Nursery

The cost of a high-quality nursery education in the UK has risen significantly in recent years but so have the number of government schemes to help families pay for it. Almost every day I need to explain these various schemes to our current or prospective families here at Lichfield Cathedral School, and through this I have come to understand just how complicated it can be to find the right solution.

Unfortunately, many families are not making the most of what is available to them, meaning funding is being missed that can never be recovered. My aim with this article is to explain all the schemes that are available and how they work.

Free Early Education Entitlement

This is perhaps the simplest area, as it is an automatic entitlement that the childcare setting will claim on your behalf.

Three and four-year-olds: All children in this age group are entitled to 15 hours of free childcare a week for 38 weeks a year. This universal entitlement is available from the term after your child's third birthday until the term in which they turn five. An hour of childcare is funded currently at £5.43 in Staffordshire meaning that this universal entitlement is worth £3,095 per year.

The 30 Hours Free Childcare Scheme

This scheme is an expansion of the free entitlement and is designed to support working parents and has been significantly enhanced in the last few years (and continues to be). To be eligible, both parents must be working and meet a minimum income threshold, while neither earns over £100,000 a year.

It's crucial to apply for a code and reconfirm your eligibility every three months to keep your funding. For children in receipt of the universal free entitlement, this represents an additional 15 hours per week. It's a significant help that can drastically reduce your monthly bills.

Two-year-olds: Funding is currently provided at £7.84 per hour in Staffordshire, meaning that this is worth up to £8,937 per year.

Three- and Four-year-olds: This expanded entitlement is available for children from the term after your child's third birthday until the term in which they turn five. An hour of childcare is funded currently at £5.43 in Staffordshire meaning that this extended entitlement is worth an additional £3,095 per year, on top of the universal entitlement, a potential total discount of £6,190.

Tax-Free Childcare

This is the entitlement that I most often find is under-utilised by fee payers. Tax-Free Childcare is a government top-up scheme for working families. For every £8 you pay into an online childcare account, the government adds £2, up to a maximum of £2,000 per year per child. This doubles to £4,000 if your child is disabled. This is a maximum benefit of £400 per year (£800 if your child is disabled).

To be eligible, both parents (or the sole parent in a single-parent household) must be in work and earn at least the National Minimum Wage for 16 hours a week.

Childcare Vouchers

While now closed to new applicants, some parents may still be using childcare vouchers through their employer's salary sacrifice scheme. If you signed up before October 2018 and are still with the same employer, you can continue to use them. These vouchers allow you to pay for childcare from your pre-tax salary, saving you money on tax and National Insurance contributions.

This scheme is per parent, not per child. If you're in a couple and both of you use childcare vouchers, you could double your savings. However, you cannot use childcare vouchers and Tax-Free Childcare at the same time, so it's important to check which scheme offers the most benefit for your family.

If you would like help understanding this further, please contact us and we can put together a bespoke quote for our outstanding Nursery at Lichfield Cathedral School.

Book a Tour Email Bursar for an informal chat Use our Nursery Fee Calculator