Thank you ssd.
Chipping - I think it's swings and roundabouts. True, it is more difficult to find work these days. However, in past years, it was far harder to find childcare and to pay for it. Maternity leave was shorter so the period of needing childcare was signficantly longer. Tax credits didn't exist. Nor did free childcare hours for 3 yr olds. So the reality was that parents paid the full rate for childcare, whereas these days up to 80% of the costs can be paid if you're on a low income.
The OP says that tax credits are calculated on previous years income, which is why she thinks they won't get any, as they were both earning too much. So, one solution (maybe too late now) would have been to put some money aside for when they knew her DH intended to study and they'd be on one income.
Also, as the child is now 5 months, and the OP says it'll be another 4 months until she returns to work, surely there can't be much of a shortfall to make up? It won't be long before the tax credits can be calculated to show that they are actually on a low income. Even if it meant using gps as a stop-gap for 2 or 3 months, she should be able to get a lot of childcare costs paid before long. So maybe that's another solution - set up registered care for when the susidy will kick in.
I do overall think it's putting a huge burden on parents and PIL to look after a lively young child day in day out. And when your first child is only 5 months, you have no idea of how much more stressful it becomes when they get mobile. A crawling, or toddling child needs watching every second, as well as providing stimulating activities plus doing all the other things the grandparents would want to be doing - housework, gardening, shopping, and just getting on with their own lives! And the worry is also that the PIL won't admit if its too much , they'll try to battle on because they know the parents can't afford childcare.
I would definitely see this as only a short term solution, and check out what credits you are eligible for asap. To not be able to afford childcare for one child, the OP must be on a low income, and her DH presumably is on none. So there should definitely be some entitlement, even if not straight away.