Childcare changes ahead

The Government has announced new tax incentives for childcare. Once fully implemented, the Tax-free Childcare Scheme will be worth up to £1,200 per child.

It will be phased in from autumn 2015 and will be open to families with children under 12. From the first year of operation, all children under 5 will be eligible and the scheme will build up over time to include children under 12.

To be eligible, families will have to have all parents in work, with each earning less than £150,000 a year and not already receiving support through tax credits and Universal Credit. The relief will receive be of their yearly childcare costs up to £6,000 per child.

Employer-supported childcare will continue to be available for current members if they wish to remain in it or they can switch to the new scheme. Employer-supported childcare will continue to be open to new joiners until the Tax-free Childcare Scheme is available.

Details of the new scheme will be set out following consultation but it is expected that parents will be able to open an online voucher account with a voucher provider and have their payments topped up by Government. For every 80p families pay in, the Government will put in 20p up to the annual limit on costs for each child. 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.

HM Treasury Link