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Budget reveals rollout plans for Tax-Free Childcare

The Government’s 2016 Budget has provided more details about the roll-out of Tax-Free Childcare (TFC). The scheme will offer eligible working families 20 per cent support towards the cost of their childcare up to an annual limit of £2000 per child (or £4000 if the child is disabled).

From early 2017, TFC will be gradually rolled out on an age-based approach, allowing parents of the youngest children to enter first. Families with multiple children will be able to join the scheme when their youngest child becomes eligible, and at that point they will be able to receive support for all their qualifying children. All disabled children will be prioritised so they will join the scheme early on in the rollout process.

By the end of 2017, TFC will be open to all eligible parents.

Parents who are receiving childcare vouchers from their employer can continue to receive them even after TFC is up and running. However, all types of Employer-Supported Childcare (ESC) will be closed to new entrants from April 2018.

A childcare calculator will be available to help guide parents in deciding which childcare support option is best for them.

The Budget confirmed that TFC will ‘sit alongside’ the doubling of the free childcare entitlement from 15 hours to 30 hours a week for working families with 3- and 4-year-olds from September 2017. The eligibility requirements for TFC and the 30-hour entitlement are the same, and parents will use the same online system to register for both.

PACEY is involved in government implementation forums to help ensure that TFC is workable for childcare professionals, and we will share more details, including how to sign up, when the information is available.

Sugar tax

A new sugar tax will be introduced in two years' time on sugary drinks. Pure fruit juice and milk-based drinks will be exempt from the tax. The proceeds are expected to raise £520m for primary school sport.

School reforms

All schools in England will be expected to become self-governing academies by 2022, dramatically removing the role of local authorities in primary and secondary education.

A quarter of secondary schools in England will be able to bid for new funding to stay open later to provide extra after-school activities like sport and art.

The Government will be investing £500m to implement its "fair funding" formula for schools in England.

Schools in the North will be given extra funding to tackle the educational divide between the North and the rest of the country.

Changes to tax and personal savings

The tax-free personal allowance will be raised to £11,500 by next April – and to £12,500 by 2020. The top rate tax will be raised from £42,385 to £45,000.

The ISA limit will be increased to £20,000 a year for all savers, and lifetime ISAs will be introduced for people under 40 for £4000 of savings.