Tax-free childcare: new scheme introduced
05 January 2016
This initiative, to be launched in early 2017, was revised by the Chancellor during the Autumn Statement. It will replace Employer Supported Childcare (Childcare voucher scheme) and is open to the self-employed as well as the employed. The government is hoping that it will make childcare more affordable to a wider population than it is currently.
Although the existing system is helping half a million families with the cost of childcare, it can only support people who have employers who agree to join the scheme. Those who are self-employed or whose employers do not join the scheme are unable to access the support available.
The changes include:
• Lowering the upper income limit per parent to £100,000 from £150,000;
• Doubling the minimum weekly income level per parent from the equivalent of
8 hours to 16 hours worked at the national living wage (£115.20 a week at the April 2016 rate of £7.20 an hour).
These changes are expected to save £215m by tax year 2020/21. Those on maternity, paternity or adoption leave will also be included.
The government has said that this tax-free childcare scheme will be available to 2 million families across the country and will be delivered by HM Revenue & Customs.
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