Parents in the South East or East of England face the highest childcare costsLondon has the highest childcare costs at almost £19,000 for a whole yearTaking a career break to care for your kids could reduce your pension pot 

Paying for childcare in the East or South East of the UK could take up as much as 54 per cent of a yearly salary, a study claims.

Those in the South East of England prove hardest hit, with full-time childcare costs of £16,219 per year, more than half of the average salary of £30,118, according to research from AJ Bell.

The figures are based on the cost of childcare for one child, and those with multiple children may find it is not financially viable for both parents to stay in work.

It comes as a separate report from the charity Coram revealed that nursery costs have risen by 7 per cent in just one year.

How much will childcare cost you? Data shows that people in the North West and East Midlands will shell out the least on childcare

A part-time nursery place for a child under two to receive 25 hours now costs an average of £158 per week, compared with just £148 in 2023, it said.

AJ Bell based its study on the cost of 50 hours of childcare per week, as well as median weekly pay pre-tax pay in 2023.

Meanwhile, in the East of England, parents earn an average of £28,382, but face childcare costs of £15,204 per year, which also eats into their salary by 54 per cent.

After paying the costs of childcare, people in the South-East will take home just £13,961, while those in the East of England will take home even less at £13,177.

While the cost of childcare can reach as high as £18,986 in London, the average wage of £37,705 means that nursery or childminder fees will take up 50 per cent of salary on average

The West Midlands and South West also came in above 50 per cent, while it will cost half the average wage in the North East to care for your children.

Laura Suter, personal finance director at AJ Bell said: 'These figures reveal the financial challenge faced by many working parents, illustrating the huge percentage of wages that can be swallowed up by childcare fees.

'When you factor in taxes, and the cost of getting to work on top of this, it's clear that for many people going back to work just isn't financially viable.

'Faced with the prospect of losing more than half their pay to childcare many parents, predominantly women, don't return to work.'

The cheapest locations for childcare are the East Midlands and the North West, with the East Midlands costing parents £12,626 per year, and taking up 47 per cent of an average salary of £26,754.

In the North West, childcare costs an average of £13,271, compared with an average salary of £27,082.

In Yorkshire and the Humber and in Wales, it will also cost less than half of the average wage to pay for childcare.

'If you find yourself taking an extended career break to care for children at home then it's important not to lose sight of the impact on your finances,' Suter said.

'You won't be paying into your workplace pension during a career break, so you should consider whether you can pay into a personal pension or Lifetime Isa during your break.'

What help can parents get with childcare costs? 

There is Government help available to pay for the cost of childcare, in the form of free childcare hours and tax-free childcare, though Suter said it was 'chronically underclaimed'.

'Tax-free childcare offers up to £2,000 a year per child off childcare costs for eligible parents, while the free hours scheme currently in place offers 30 hours for parents of three and four-year-olds,' she added.

The free hours scheme is set to be extended to 30 hours for children from 9 months old in September 2025.

However, the free hours only apply in term time and often don't pay enough to cover the full hourly fee, meaning nurseries have to charge additional fees.

Parents should also ensure they are claiming any child benefit they are eligible for.

The Chancellor raised the threshold at which working parents pay the high income child benefit charge to £60,000 in the Spring Budget.

Currently the Government claws back child benefit from households where the highest earner has an income above £50,000, and withdraws it completely when they earn over £60,000.

This will change from April, when the threshold will rise to £60,000, while the threshold at which it is withdrawn will increase to £80,000.