Having a baby: the money guide
A new baby rearranges your finances as thoroughly as it rearranges your sleep. The costs are real — but so is the support, and a lot of it goes unclaimed simply because new parents are too tired to dig through the rules. Here’s what you’re entitled to, and where the money actually goes.
This is information, not financial advice. Benefit rates and rules change and depend on your circumstances; check GOV.UK or use a free benefits calculator (Turn2us, entitledto) for your exact entitlement.
Pay while you’re off work
- Statutory Maternity Pay (SMP) runs for up to 39 weeks: the first 6 weeks at 90% of your average weekly earnings, then 33 weeks at £194.32 or 90% of your earnings, whichever is lower. You can take up to 52 weeks of maternity leave in total (the last 13 weeks are unpaid unless your employer offers more). Many employers pay enhanced maternity packages — check yours.
- Maternity Allowance is the fallback if you don’t qualify for SMP — for example if you’re self-employed or recently changed jobs. It’s worth up to £194.32 a week for 39 weeks.
- Statutory Paternity Pay covers up to 2 weeks at £194.32 or 90% of earnings (whichever is lower). Shared Parental Leave lets couples split up to 50 weeks of leave between them if they prefer.
Child Benefit — claim it, even if you’re a higher earner
Child Benefit is £27.05 a week for your eldest or only child and £17.90 a week for each additional child. Two reasons to claim it even if you think you earn too much:
- It gives the claiming parent National Insurance credits that protect their State Pension during the years they’re not working — genuinely valuable, and easy to miss.
- You can claim but opt out of the payments, so you get the pension protection without triggering the tax charge below.
The catch is the High Income Child Benefit Charge: if you or your partner has an income over £60,000, some of the benefit is clawed back through the tax system, and it’s fully clawed back once income reaches £80,000. It’s based on the higher earner’s income — so pension contributions, which lower your taxable income, can sometimes keep you under the threshold.
Help with childcare — the big one
Childcare is usually the largest new cost, and there are three main forms of help (you can often combine some):
- Tax-Free Childcare. For every £8 you pay into an online childcare account, the government adds £2 — up to £2,000 per child per year (£4,000 if your child is disabled). It’s for working parents and covers registered childcare up to age 11.
- Funded hours. Working parents in England can now get 30 funded hours a week of childcare from 9 months old up to school age (during term time). It’s a major saving — worth thousands a year — so apply in good time before you need the place.
- Universal Credit childcare. If you’re on Universal Credit, you can reclaim up to 85% of childcare costs — but you generally can’t use this and Tax-Free Childcare at the same time, so check which leaves you better off.
One-off help worth checking
- Sure Start Maternity Grant: a one-off, tax-free £500 (in England and Wales) if you’re on certain benefits and it’s your first child (or you’re having a multiple birth). It doesn’t have to be repaid. Scotland has its own, more generous Best Start Grant instead.
- Healthy Start: if you’re on qualifying benefits, this gives you a prepaid card for milk, fruit, vegetables and vitamins during pregnancy and the early years.
- Free prescriptions and dental care during pregnancy and for 12 months after birth (apply for a maternity exemption certificate).
Where the money really goes — and where to save
The eye-catching costs (the pram, the cot, the tiny outfits) are rarely the big ones. The real costs are childcare and lost income while a parent is off or works fewer hours. So:
- Buy second-hand and accept hand-me-downs. Babies outgrow clothes and kit in weeks — buying it all new is money straight down the drain. (Buy car seats new, though, for safety.)
- Don’t over-equip. Much of the “essential” baby gear goes barely used. Borrow first, buy if you actually need it.
- Rebuild your budget around the new normal. Map your reduced income against your new outgoings before the baby arrives — our budget planner is a quick way to do it.
- Revisit the grown-up stuff. A new dependent is the classic moment to sort life insurance and a will (see our guides), and to make sure your emergency fund is healthy.
The bottom line
Claim Child Benefit (for the pension credits alone), set up Tax-Free Childcare and your funded hours, check the one-off grants you’re entitled to, and be ruthless about not buying new what you can borrow. The costs of a baby are real — but a lot of the help is there for the asking.
Rebuild your budget around the new arrival →
Last checked 1 August 2026. UK figures for 2026/27: SMP/Maternity Allowance/Paternity Pay £194.32/wk; Child Benefit £27.05 / £17.90; HICBC £60,000–£80,000; Tax-Free Childcare up to £2,000/child; funded hours from 9 months (England). Not a personal recommendation.
Sources
Just so you know: this guide is information and journalism, not financial advice, and we don't recommend specific financial products. Your circumstances are your own — if you need personal advice, speak to a suitably qualified adviser. Information was correct at the "last updated" date above but things change; always check the linked primary sources.