Today the Prime Minister announced that from Autumn 2015 the Government will provide tax-free childcare (at the base rate of 20%) for children under 12 to families where both parents, or a single parent, work.
How will the scheme work
The Government will provide 20 per cent support on childcare costs up to £10,000 per year for each child under the age of 12 via a new simple online system [i.e. up to £2000 per child per year]. Parents can then use this discount to pay any registered childcare provider.
The scheme will be open to more than twice as many families as currently use Employer Supported Childcare (ESC) vouchers (the Government estimates 1.9 million families will benefit) and, unlike ESC, will not depend on employers offering it. In addition to giving support to the self-employed, the scheme has been adjusted to ensure those working part-time, earning £50 per week and above, those on maternity, paternity or adoption leave and those starting their own business who may not meet the minimum earning requirement will be included, giving them government help with childcare costs for the first time.
All working families where the parents earn at least £50 per week will benefit, unless one of the parents earn over £150,000 or receives support from tax credits, Universal Credit or ESC.
Extra help with childcare costs for those on Universal Credit. To make sure work always pays the Government intends to cover 85% of the cost of childcare for around 300,000 working families.
Today’s announcement will be welcome news with the measures helping many parents in Croydon Central who are struggling with the cost of living and the cost of childcare in particular. It is a further sign that this Government is doing all it can to help those trying to do the right thing.