Budget 2026: What It Means for Childcare Costs and Working Parents

The Budget on 28 October 2026 brought news for working parents, but the dates matter. The new parental allowance is planned for April 2029. For a nursery place or return to work in the next few months, base your plans on the support you can claim now.

What did the Budget announce for parents?

The Budget introduced a parental allowance for eligible self-employed fathers, partners and adopters in Great Britain from April 2029. Some parents with irregular employment histories will also qualify. Our parental allowance guide explains who could benefit and which details are still to come.

Minimum wage rates will rise by 3.9% from April 2027, taking the National Living Wage for people aged 21 and over to £13.21 an hour. That can affect both parents’ earnings and childcare providers’ staffing costs.

Have Tax-Free Childcare or funded hours changed?

The Budget did not announce a new expansion of Tax-Free Childcare or England’s working-parent funded hours. Do not treat the parental allowance announcement as an increase in your childcare account top-up or an extra allocation of nursery hours.

You can still use the existing schemes if you qualify. Our guide to combining funded hours and Tax-Free Childcare explains how they work together. Funded hours are devolved: the working-parent offer discussed here is for England, and different arrangements apply elsewhere in the UK.

Could my nursery bill increase?

Nurseries were excluded from the announced high-street business rates discounts. The National Day Nurseries Association has raised concerns about the pressure on providers, including wage costs. That does not establish what any particular nursery will charge.

Our nursery fees guide sets out what to ask your provider. A wage increase is not a nursery fee increase of the same percentage: providers have different costs, funding and pricing decisions.

What should parents do now?

• Ask your provider for its next fee review date, notice period and an itemised quote for your actual sessions.
• If you want funded hours in England from January, check the January 2027 application deadline and arrange a place with your provider.
• Keep your childcare account reconfirmation reminder in place. A Budget announcement does not replace the account checks.
• Use your remaining eligible provider bill in the Tax-Free Childcare calculator rather than assuming the headline nursery price is what you need to deposit.