Two Families, Two Very Different Childcare Bills
Two Families, Two Very Different Childcare Bills
Many parents know that childcare in England comes with some government help. But fewer realise quite how much it has changed in the last couple of years, how often the assumptions they hold about their own situation turn out to be wrong, and how much depends on numbers they’ve never been asked to think about before. Here’s how that played out for two families.
Family One: The £63k Earner Who Worried They’d Have to Pay Child Benefit Back
One parent earns £63,000. They had heard that going over £60,000 means losing some Child Benefit, and worse, having to pay some of it back through their tax return. They had considered not claiming in the first place.
What they hadn’t realised is that the £60,000 threshold isn’t based on salary. It’s based on adjusted net income; income after certain deductions, pension contributions being the main one. They were already paying 5% into their workplace pension through standard auto-enrolment, the same as most employees. That alone brought their adjusted net income down to £59,850, just under the line. No repayment, no extra action needed. They’d been protected the whole time without knowing it.
On the childcare side, the numbers worked out well too. Three days of nursery came to £1,198 a month at full price. Once 30 funded hours and Tax-Free Childcare were applied, that dropped to £387. Suddenly, going back to part-time work made clear financial sense, something this family hadn’t worked out until they actually ran the numbers.
Family Two: The £110k Earner Who Lost Everything, Without Realising Why
One parent earns £40,000, the other £110,000, with two children in nursery.
Cross £100,000 in adjusted net income and the family loses both 30 funded hours and Tax-Free Childcare entirely. It doesn’t matter which parent earns more, or whether the lower earner works at all. One partner over the line is enough.
Without that support, full time nursery costs around £2,000 per child, per month; £4,000 for two. The £40k earner takes home roughly £2,560 a month after tax and pension. On paper, working actually costs this family money: childcare outstrips the second salary by close to £1,500 a month.
With funded hours and Tax-Free Childcare restored, the same nursery place drops to around £1,200 per child; £2,400 for two. The second income comfortably covers it, with a bit left over.
The fix wasn’t about whether to work. Extra pension contributions brought the higher earner’s adjusted net income back under £100,000, and the whole situation changed. Worth noting too: even without that fix, there can be good reasons to keep working through a tight patch. Pension contributions, career progression, and simply staying in the workforce all have value beyond this month’s bank balance. If you wanted to fully cover £2,000-a-child nursery fees from one salary alone, with no support at all, you’d need to be earning closer to £70,000 to break even – which is why so many parents were struggling before these latest changes to the funded hours scheme. Our premium calculators can help you model exactly what you’d take home in any scenario.
Three Gaps, Two Families
Both of these families fell into the same three traps that I see again and again.
A knowledge gap: not realising quite how much government support has expanded in the last couple of years, or how generously it stacks together. An assumption gap: believing they didn’t qualify, or believing the threshold was somewhere it isn’t. And a clarity gap: knowing the rough shape of the rules, but not knowing how those rules interact with their own salary, pension and family setup.
Closing those three gaps changed the maths for both families. In one case, the answer was already protected by a default pension contribution they didn’t realise mattered. In the other, a deliberate pension adjustment restored thousands of pounds of support.
If your own numbers feel similarly unclear, our free calculators and resources can show you exactly where you stand. For situations that are more tangled, bonuses, fluctuating pay, two incomes near a threshold or just those families that want some bespoke help, booking a consultation gets you a proper, personalised answer.
Catherine is the founder of Milk & Money. As a parent of three working out childcare costs herself, she got tired of how hard it was to find clear answers, so she built somewhere parents could. Find her calculators, resources and consultations at milkandmoney.co.uk.
