The government is proposing a new Tax-free Childcare scheme worth up to £1,200 per child. However, it will be of no benefit to the small army of work-at-home parents who juggle work and childcare themselves.
- The new scheme will be phased in from autumn 2015.
- The precise rules are subject to consultation.
- In the first year all children under 5 will be eligible and the scheme will build up over time to include children under 12.
- It is expected that under the scheme parents will be able to open an online voucher account with a voucher provider and have their payments topped up by Government.
- Parents will be able to use the vouchers for any Ofsted regulated childcare in England and the equivalent bodies in Scotland, Wales and Northern Ireland
Eligibility:
- Families will have all parents in work, with each earning less than £150,000 a year.
- Unavailable to those who receive support through tax credits or Universal Credit.
- Tax relief will be 20% of yearly childcare costs up to £6,000 per child (20% x £6,000 = £1,200)
Benefit claimants
- The government says that it will increase childcare support to improve work incentives and ensure that it is worthwhile to work up to full-time hours for low and middle income parents.
- The details of how to provide this support will be determined as part of the consultation on the scheme for parents not in receipt of Universal Credit, to ensure the two schemes operate effectively together.
The Government will shortly consult on the detail of the new Tax-free Childcare scheme, including on how employers could continue to play a role in supporting their employees with childcare costs within the new system.
Prime Minister, David Cameron said:
"This is a boost direct to the pockets of hard-working families in what will be one of the biggest measures ever introduced to help parents with childcare costs.”
Deputy Prime Minister, Nick Clegg said:
“An extra £1,200 for each child will make a real difference to families who find themselves constantly worrying about how to juggle their family budget.”
Editorial comment - work at home parents
The new scheme is going to be a bonus for parents who may have lost out under the new High income child benefit charge measures as it effectively making child benefit payable to all working parents. The losers of this new scheme are the many thousands of part-time work-at-home small businesses which are run by entrepreneurial parents.
Home working arrangements often allow parents to juggle working life and parenting. Such arrangements save them child care costs and go some way to equalising a home-work balance for young families. These work-at-home businesses are often very small and grow when the children start secondary eduction but they will suffer the disadvantage that the new scheme will only provide credit if you are paying child care to Ofsted registered providers, so a small army of entrepreneurs stands to lose out by making the decision to balance families with work.