New Tax-Free Childcare Scheme

10th December 2013

The Government has announced that from autumn 2015 there will be a new benefit scheme to help with childcare costs to replace the current childcare voucher scheme.

The new scheme, which for the first time will be open to the self employed, will only be available for families where either both parents or a single parent works. Earnings per parent must be less than £150,000 for each parent per year. Work in this case means that each parent must work at least 16 hours a week.

It will not be available to families that receive support through Tax Credits or Universal Credit (which will be introduced in the next two years to replace tax credits), as in this instance parents can get up to 70% of childcare costs paid by the government.

The new scheme will allow parents to receive up to £1,200 a year for each child which will work out as up to 20% of their childcare costs. In the first year, all children under 5 will be eligible, with the age range eventually including all children under 12.

Further details of exactly how the new scheme will operate will be announced in due course, including how employers can continue to play a role in supporting employees with childcare costs. We will keep you up to date on any developments in the run up to the new scheme being introduced.

Chartered Accountants in Sunderland, offering expertise on everything from Tax and Business Planning,
to Accounts and VAT.