Quick stats

£7,000-£8,000 The average annual amount parents pay for a child's day-nursery care, according to the Daycare Trust. The average for a childminder is £7,500

£33,000 a year Total amount that families with nannies fork out for a "live-out" nanny in London, according to specialist payroll service NannyTax

Simple saver

Claim for any state help available such as childcare vouchers, if offered through your employer. These vouchers are either online or paper coupons that employees can use to purchase up to £55-worth of childcare a week (£243 a month), free of tax and National Insurance. As well as nurseries, they can be used for nannies and childminders - but only registered ones.

Each parent can claim, therefore doubling the amount of benefit to £110 a week and maximum tax relief to £2,390 for two higher-rate earners (each basic-rate taxpayer can save £962 a year). Use persuasion if your employer doesn't offer these childcare vouchers - remind them this means that they won't have to pay National Insurance on the portion of your salary you take in vouchers.

There are many organisations offering vouchers, such as the not-for-profit employersforchildcare.org, and some might be able to support your efforts.

Note that if your employer pays you more than the £55 weekly voucher maximum, then you must pay tax and National Insurance on the difference.

Your employer might cover the whole cost of the vouchers but, more likely, will offer help with the cost through a "salary sacrifice" scheme. This means you use the top slice of your pay to cover the voucher costs, thereby reducing your own tax and National Insurance bills (just be aware of how these reduced NI contributions might affect other state benefits you might receive).

Advanced saving tips

1. Don't miss out on any financial help

If you're working and your employer offers assistance (they're not obliged to) then grab it. There are typically three types of employer scheme: the aforementioned childcare vouchers, workplace nurseries, and workplace nursery partnerships, where employers use off-site facilities. If your employer offers an on-site nursery and it meets certain conditions, all the costs might be free of tax and National Insurance. Sadly, these are in decline as employers turn increasingly to offering vouchers instead.

2. Check if you qualify for childcare tax credits

Lower earners can also get help towards childcare costs worth up to £175 a week for one child, or up to £300 a week for two or more, through the working tax credits system, so long as they use registered or approved childcare (this can't be a relative or an unregistered nanny). You can claim up to 80% of your eligible childcare costs so long as you work at least 16 hours a week.

To check your eligibility visit entitledto.co.uk, and for more information read up at payingforchildcare.org.uk

3. Do the maths

Not sure if you'll be better off with childcare vouchers or tax credits? (you can't have both, obviously). Normally, if you get tax credits of more than £545 a year (£1,090 in your child's first year) it is better to opt for tax credits than vouchers. Use the calculator at hmrc.gov.uk/calcs/ccin.htm to check what's best for you.

Child tax credit and the child-related elements of working tax credit are paid to the main carer. If you are self-employed, tax credits are paid directly by HM Revenue & Customs. The self-employed can't receive childcare vouchers but directors of companies can have them, so long as they are available to other employees of the company, too.

4. When kids go free ...

Don't forget that all children aged three and four are entitled to a free, part-time (12½ hours a week for 38 weeks a year) early education place. This can be in a variety of locations, so long as it's registered by government regulatory bodies and inspected regularly. Call the Daycare Trust helpline: 0207-8403350 (Mon, Wed, Fri, 10am to 5pm) or visit daycaretrust.org.uk

5. Find an au pair

Au pairs are the cheapest form of paid childcare - they must be paid a minimum of £60 "pocket money" a week for 25 hours work and two evenings' babysitting. But it is important to remember they are really students, here to learn the language, and should be treated as part of your family. They are often still teenagers and probably should not be left in sole charge of very young children - nor worked to death doing heavy housework!

Nice little earner

If you love kids and fancy seeing the world, why not make a living out of caring for the children of wealthy families abroad? Posts recently advertised for experienced nannies on nannieisnc.com include, for example, a live-in job caring for the baby of a family based in Geneva but travelling extensively at a salary of up to £800 a week, and the shared care of three children for a Moscow-based family at £500 a week plus share of an apartment - again with international travel.

If you prefer to stay in the UK, the highest salaries are in central London where live-in nannies command an average of £328 a week plus accommodation, food and sometimes a car and pension thrown in, according to payroll specialists Nannytax. Daily nannies who pay for their own accommodation earn an average of £408 a week in the capital.

Planet saver

Encourage your childminder or nanny to avoid using the car when looking after your children, and to use healthy homemade optionsfor feeding the baby rather than relying on convenient ready-meals and jars.