Advertisement
🇬🇧 UK-only · Updated for 2026/27 Tax Year

Childcare Cost Calculator

Calculate if going back to work is actually worth it. Model your net salary against your nursery fees using Tax-Free Childcare and Universal Credit schemes.

✓Effective Hourly Rate✓Tax-Free Childcare limit✓UC 85% limit✓Free — no sign-up

Your Salary & Childcare Bill

After any 15/30 free hours applied

Monthly Cash Flow

Net Monthly Salary:£0.00
Nursery Bill:£1400.00
Govt Scheme Support:-£0.00
Your Out-of-Pocket Childcare:-£0.00
Profit from Working:£0.00
Effective Hourly Rate

£0.00 / hr

You are losing money by working. Your childcare costs exceed your net take-home pay.

Advertisement

Is Working Worth It When Childcare Costs So Much?

It is the question every parent asks at the end of their maternity or paternity leave. With the average full-time nursery place now costing over £1,400 a month in the UK, many parents find themselves working essentially for free just to cover the bill.

To figure out if returning to work is financially viable, you must calculate your "Effective Hourly Rate". This is the money you have left over from your net take-home pay after you have paid the nursery, divided by the hours you worked. Use our Take-Home Pay Calculator to check your base net pay first.

The Three Ways to Get Help with Childcare Costs

The government provides three distinct schemes to help lower the financial burden. You cannot use Tax-Free Childcare and Universal Credit at the same time, so you must choose the one that works best for you. However, the "Free Hours" scheme can be combined with either of them.

30 Free Hours (Final Rollout April 2026)

As of April 2026, the massive expansion of free childcare has been fully rolled out. Eligible working parents of children aged from 9 months up to school age can claim 30 hours of free childcare a week. Note that this is only for 38 weeks of the year (term time). If you need childcare year-round, most nurseries will "stretch" this to roughly 22 free hours a week over 52 weeks.

Tax-Free Childcare — 20p for Every 80p You Pay

For working parents not claiming Universal Credit, Tax-Free Childcare is the standard support scheme. You open an online government account and pay your money in. For every £8 you deposit, the government tops it up with £2. This effectively gives you a 20% discount on your bill, up to a maximum saving of £2,000 per year per child. Neither parent can earn an adjusted net income over £100,000. Check out our £100k Tax Trap guide if you are close to the threshold.

Universal Credit Childcare Element — 85% Back

If you are on a lower income and claim Universal Credit, this is almost always the best option. You can claim back up to 85% of your eligible childcare costs. The maximum you can claim back is strictly capped at £1,014.63 a month for one child, or £1,739.37 a month for two or more children. You can model your exact UC entitlement using our Universal Credit Calculator.

Childcare Salary Sacrifice — How It Reduces Tax and NI

You may have heard of the "Childcare Voucher" scheme. This was a hugely popular salary sacrifice scheme where the cost of childcare was deducted directly from your gross pay, saving you both Income Tax and National Insurance.

Unfortunately, the government closed this scheme to new entrants in 2018 in favour of Tax-Free Childcare. If you joined the scheme before then and have stayed with the same employer, you can continue to use it. You can model other gross deductions using our generic Salary Sacrifice Calculator.

Parental Support

Frequently asked questions

Is it worth going back to work when childcare costs so much?
This depends entirely on your salary and which government schemes you qualify for. For many parents on average salaries with two young children, nearly 80% of their net take-home pay can go towards childcare, resulting in an effective hourly wage of just £2 or £3. Use our calculator above to find your exact effective hourly rate.
How does the 30 free hours childcare work in 2026?
As of April 2026, the government's extended rollout is complete. Eligible working parents can now claim 30 hours of free childcare per week (term time only, or 22 hours stretched) for children aged 9 months up to school age. You must earn at least the National Minimum Wage for 16 hours a week, but no more than £100,000 a year.
Can I get help with childcare costs through Universal Credit?
Yes, and it is usually the most generous scheme available. If you are eligible for Universal Credit and are working (or have a job offer), you can claim back up to 85% of your eligible childcare costs, capped at £1,014.63 a month for one child or £1,739.37 a month for two or more children.
What is Tax-Free Childcare and how do I apply?
Tax-Free Childcare is a government scheme where for every £8 you pay into an online account, the government adds £2 (effectively giving you 20% off). You can get up to £500 every 3 months (up to £2,000 a year) for each of your children. You apply via your GOV.UK childcare account.
Is Tax-Free Childcare better than childcare salary sacrifice?
The childcare voucher (salary sacrifice) scheme closed to new entrants in 2018. If you are already in the scheme, it may be better than Tax-Free Childcare if you are a basic rate taxpayer with low childcare costs. However, for most parents with full-time nursery fees, the £2,000 Tax-Free Childcare cap is far more generous.
When did the 30 free hours childcare rollout complete?
The expansion to 30 free hours for all eligible working parents of children aged 9 months and older was fully rolled out and completed in April 2026.
Am I eligible for Tax-Free Childcare?
To be eligible, you (and your partner, if you have one) must both be working and earning at least the equivalent of 16 hours a week at the National Minimum Wage. Neither of you can have an 'adjusted net income' of more than £100,000 a year. You also cannot claim Tax-Free Childcare at the same time as Universal Credit.
Advertisement