Costs of childcare

Little Beans Nanny Agency receives various questions relating to childcare but one stands out as being the most asked – “what does it cost?” so we have written a guide to give an explanation of possible costs to consider for different childcare options.


Having a nanny is often most cost-effective if you have 2 or more children as the cost is per family rather than per child as is the case with most other forms of childcare. It is essential to discuss salary in gross rather than net so that you are not hit with a lot of unexpected expenses. Even so, there are a number of other costs to employing a nanny that you should consider:

  1. If you use a payroll company they tend to charge £200/year (perhaps more dependant on the service you choose)
  2. Unless they opt out or are not eligible, you will need to pay 3% of your nanny’s salary into a pension scheme
  3. Employees should have all work expenses paid (e.g. when the nanny takes the children out you should pay entrance fees for all). Most employers provide a kitty or collect receipts from the nanny to reimburse each week/month but you should allow £25+/week for this.
  4. A nanny using her own car will require her mileage to be reimbursed at a rate of up to 45p/mile. A full-time nanny can accumulate a mileage bill of roughly £35/month. On the other hand, if the employer provides a car for the nanny to use whilst on duty then you would need to add her to the insurance which can vary by provider (contact your insurer for a quote).
  5. As an employer you should get public liability insurance. Your house insurance may cover this but there may be increases if you have domestic staff or you may need to purchase a separate policy. This can equate to £70 annually.
  6. Having an Ofsted registered nanny is only really necessary if you are entitled to financial help with childcare but as a work-related expense it would be the employer who should cover the £103/year registration fee. Any other work-related course or registration should, in theory, be paid for by the employer although most nannies keep their own documentation up to date.
  7. Allow £90/month for this as a rule of thumb for employer’s national insurance contributions as there is no exemption for domestic staff.
  8. Using an agency to place a nanny is often worth the expense to know your nanny has been thoroughly checked and you have support and advice at hand. Agency fees vary but should be no more than £2500 per placement (dependant on the schedule of the nanny).

The main outlay of having a nanny depends on the type of nanny you have:


Nannies who live in are around £550-600/week in wages (based on a full-time schedule). The nanny would need to be provided with accommodation (private room), utilities, and food which can vary in costs hugely but you ought to allow £60+ per week to cover these expenses which include adding them onto your home insurance.


Per hour nannies charge an average of £14-15 gross. This can add up to £750 for a 50 hour week. On top of this, you would usually expect to provide meals and drinks over the time that the nanny is working which can increase the weekly budget by around £20 however nannies can bring their own lunch with them if required.


A nanny who brings her own child(ren) to work is referred to as an NWOC and can be a good option for families with older children or those wanting wrap around care. Generally, NWOC’s are cheaper at a rate of just £12.50-13/hr. The additional costs for the nanny still apply but the nanny would expect to cover the costs of their own child and not the employer.


As they are lower qualified and/or lacking in experience a junior nanny is, like NWOC, a good way of keeping costs down. At a rate of £12.50-13/hr they are cheaper than a fully qualified and experienced nanny.


A childminder works in their own home in an area that is set up to promote childrens’ growth and development. A childminder will look after several children from multiple families at one time and as such the fees are usually £6-9/hr per child. Some childminders will give discounts for full time children or siblings and all childminders are registered with Ofsted so some families are able to get help with funding. Occasionally childminders may charge additional fees for meals or large outings but generally all costs are included in the hourly rate.


Dependant on the nursery the fees can be £320-420/week per child. This is often a good option for socialising an only child but can get expensive if you are placing more than one child in the setting. However, nurseries often give discounts for siblings. Some nurseries have a registration fee, a uniform or have extras (like classes) that are chargeable, most of these are optional but you may like to factor them in to your budget.


The rates given are guides only and refer to the Home Counties area. In London you can expect to add 30% or more onto the rates and further north of England they can drop by up to 15%.
Costs mentioned may be lower if employing a younger nanny but should always be above the national minimum wage.
There may be additional costs not mentioned above and vice versa not all the costs apply to every employer.
There is plenty of help with childcare costs so although the guide may seem daunting; you may be able to have the costs reduced significantly with help from other sources. Please call Little Beans Nannies if you would like advice on this.
For further information, advice or to instruct us to find childcare for you, please contact Little Beans Nannies.