Is Childcare Worth It Calculator
Calculate if returning to work with childcare costs is financially worthwhile after tax benefits.
Your Income
Working Costs
Nursery, childminder, au pair, etc.
Train, car, fuel
Tax credits, child benefit reduction
Annual Decision
Worth It
Net annual gain
£26,320
Effective hourly rate
£13.71/hr
You keep £26,320 per year after all childcare and work costs
Monthly Breakdown
Note: This calculation doesn't include:
- Career progression and future salary growth
- Pension contributions (which are valuable)
- Flexible working arrangement discounts
- Employer childcare schemes (e.g., childcare vouchers)
- Psychological benefits of work and independence
When Returning to Work Is Genuinely Worth It
The maths often surprises households. A £40,000 salary returning to work full-time with one child in nursery at £1,400/month produces a net gain of roughly £4,500/year in 2026/27, after tax (£5,486), NI (£2,194), childcare costs (£16,800) and assuming no commute. That works out to about £2.30/hour worked - well below minimum wage in real terms.
The same parent on a £55,000 salary nets closer to £15,000/year, or £7.80/hour. The break-even is heavily sensitive to childcare cost: full-time nursery in London averages £1,800/month (£21,600/year), in the North averages £900/month (£10,800/year). Use the calculator to plug in your actual local cost rather than national averages, because the regional spread is wider than most national articles suggest.
Government Support That Changes the Maths
Tax-Free Childcare gives a 20% top-up on contributions up to £2,000 per child per year (£500/quarter), so a £10,000 nursery fee becomes effectively £8,000 if the parent uses the scheme. Fully funded 30 hours/week of childcare for working parents of children aged 9 months to school age (April 2026 expansion) is the biggest game-changer in years - it can wipe £8,000 to £15,000 off annual nursery costs depending on hours used.
Universal Credit covers up to 85% of childcare costs for low-income working parents, paid in arrears against receipts. Workplace nursery vouchers (closed to new joiners since 2018) still benefit existing users. The key planning point: model the post-April-2026 funded hours scenario as well as the legacy scenario, because the gap between them is often £500/month or more. Pair the result with the [UK Tax Calculator](/uk-tax-calculator) to see your actual take-home, and the [Maternity Pay Calculator](/maternity-pay-calculator) to compare against staying on extended leave.
Frequently Asked Questions
Is going back to work worth it for £20,000 a year?
On a £20,000 salary with full-time nursery at £1,200/month, after tax, NI and childcare you may net less than £1,500/year, or under £1/hour worked. Many households conclude it is not financially worth it for the lower-earning parent to return full-time at this income level. Part-time hours that fit within the funded childcare entitlement (30 hours/week from April 2026) often produce a much better hourly return.
Should I take Tax-Free Childcare or stay on the old vouchers?
If you are still receiving childcare vouchers via salary sacrifice from before October 2018, run both scenarios. Vouchers offer up to £243/month tax-free for basic-rate taxpayers (worth roughly £933/year saving) or £124/month for higher-rate (worth £478/year). Tax-Free Childcare offers up to £2,000/year per child. Households with multiple children and total childcare costs above £10,000 usually win with TFC; single-child households on basic rate often do better with vouchers if costs are below £4,000.
What about long-term career impact?
The calculator only models the current year's net gain or loss. Career break research (notably the Resolution Foundation's analyses) suggests parents who take 5+ years out lose 15-30% of lifetime earnings compared to those who stay in work part-time. The annual £2,500 'loss' from going back to work might be a £150,000 'gain' across a 25-year career through preserved progression. Hard to model, but worth weighing against the year-one figure.
Can I work from home to reduce childcare hours?
Mostly no for under-3s. Genuinely productive working with a 1-year-old at home is rare and typically only feasible for very short periods. Nursery for 3 days a week plus working from home with a grandparent on the other 2 days is a common compromise that drops childcare costs by 40% while preserving most working hours. The maths shifts noticeably once children are 3+ and at preschool/funded hours, when full-time work-from-home with school pickup becomes practical.
Related Tools
UK Tax Calculator
Calculate your take-home pay after income tax, National Insurance, student loan repayments and pension contributions for the 2026/27 tax year
Childcare Cost Calculator
Calculate your annual childcare costs and see if childcare schemes like Tax-Free Childcare help.
Maternity Pay Calculator
Calculate how much statutory maternity pay you're entitled to based on your salary and length of employment.