Paying Grandparents for Childcare In The UK

23 September 2018

7 min read approx

The vast majority of young families say that their grandparents are their first choice when it comes to looking after their children or other close relatives. If this is a regular occurrence, is paying grandparents for childcare in the UK allowed?

Childcare costs are spiralling and with limited financial help available, 97% of families say that they turn to grandparents or other close relatives for childminding help. This can be picking up and dropping off school age children or looking after a child full-time whilst parents work.

It makes sense that if you are relying heavily on a relative that you pay them for childminding duties but is this legal? What are the rules relating to paying someone as a childminder? Let’s find out more about paying grandparents for childcare here in the UK.

When should you register as a childminder?

You should register as a childminder if you are looking after children who are not close relatives, are doing so for more than two hours a day and are charging for your service.

A professional childminder will also have a DBS check to check they are safe to work with children, hold a paediatric first aid certificate and be inspected by the appropriate body, which is England is OFSTED. You should also consider a childminding course and possibly online childcare courses if you are thinking about registering as a childminder.

What is the definition of a ‘close relative’ when it comes to childminding?

family member getting paid for childcare

There is a ruling that says a close relative who looks after a child relative does not have to register as a childminder but could technically charge for the time they look after the child.

A close relative is defined as a grandparent, aunt or uncle. So it would seem that anyone outside of this definition would, in the eyes of the law, register as a childminder although this is not made clear!

Is paying grandparents for childcare in the UK legal?

It is not uncommon for parents to make a payment to a relative who looks after their child on a long-term basis, for example, every day after school or every shift that they work.

How this income is treated is a grey area. Some say that your relative would need to declare this money as income and pay income tax on it be declaring a return. Others say that this is not the case and is a token gesture payment.

It is hard to find any clarity on the situation but payments are ‘token gestures’, e.g. not at the current professional childminder rate. The average rate for 25 hours of childcare a week for a child under 2 is just over £107 per week with full-time care rising to £227 per week.

Can it be seen as ‘expenses’, rather than payment?

For many parents, the costs of childcare are so high that returning to work part or full time is not financially worth it. And this is why parents rely on grandparents and other relatives to care for their children.

There is also the question of suitable childcare arrangements for parents who work shifts and irregular hours. Quite often, grandparents will have grandchildren to stay overnight and take them to school in the morning, whilst their parents work at night.

And then there are the school holidays from the 6-week summer stretch to half and end of term breaks.

It could be argued that the money you give your close relative is to cover expenses, such as food and outings.

Again, providing you are not paying a ‘salary figure’, it could be argued the money is expenses.

But what if a relative wants paying the current childminding rate?

Naturally, grandparents and other relatives may expect the current childminding rate if they are doing the childminding duties. So, since your relative is likely to be taking on the brunt of the childminding, then you should pay the same level of money for a professional childminder with a schedule of activities, play and learning.