Today, the Government launched a 12 week long
consultation on the details of the Tax-Free
Childcare
At Budget 2013, the Government announced the
introduction of Tax-Free Childcare for working families. The
Government will provide 20 per cent of working families’ childcare
costs, subject to an annual limit of £1,200 contribution from the
Government for each child. This is equivalent to basic rate tax
relief of childcare costs up to £6,000 a year. The Government has
set aside £750 million per year to support Tax-Free Childcare, and
this expenditure has been reflected in the Government’s decisions
at the Spending Round 2013.
Under Tax-Free Childcare, parents will register
with a voucher provider and open an online account. The Government
will then ‘top up’ payments into this account at a rate of 20p for
every 80p that families pay in, subject to the above limit
Households in which all parents work but do not
receive support through tax credits (or Universal Credit) will be
eligible for Tax-Free Childcare, so long as neither parent is an
additional rate taxpayer. Households that receive tax credits or
Universal Credit will get support through those systems.
Tax-Free Childcare will be phased in from autumn
2015. From the first year of operation, all children up to age five
– and disabled children under the age of 17 – will be eligible. The
scheme will then build up over time to include children under
12.
Liz Bayram, Chief Executive, PACEY comments:
"Any new funding to help working families with the cost of
childcare must be welcomed. These proposals increase the help
available to families with more than one child and reach families
who currently do not benefit from employer supported childcare
vouchers. That said, there are a number of concerns that PACEY will
be raising through this consultation, in the hope that Government
will reflect again on some of the limits it has currently set for
the scheme. PACEY would like to see access to the scheme for
parents of school age children brought in earlier and changes made
to the current parametres, so that families on lower incomes can
benefit. As well as helping with childcare costs for more families,
these changes would mean more children would be cared for in safe
registered childcare."