Tax-free childcare scheme
The government has published a further consultation document on plans to introduce a new childcare scheme to support working families with their childcare costs. The new scheme is set to be launched in autumn 2015 and will replace the current salary sacrifice scheme. Unlike its predecessor, the new scheme will be available to the self-employed and those on a minimum wage.
The scheme which will be worth up to £2,000 per child each year and will be available, initially, to children under the age of 5 but will be expanded over time to include all children under 12. For every 80p in the £1 contributed by parents an additional 20p (or 20%) will be funded by government up to a maximum child care spend of £10,000 per child, per annum.
Parents will be able to choose their own voucher provider, as the new system will not be administered by employers and will use the vouchers at any Ofsted regulated childcare centre in England and the equivalent bodies in Scotland, Wales and Northern Ireland.
The scheme will provide support for families where both parents are working and not in receipt of the Childcare Element of Working Tax Credits/Universal Credit. In order to be eligible to use the scheme neither parent can earn more than £150,000 a year.
The new consultation focuses on the options available to deliver the tax-free childcare scheme in the public sector and is open for comment until 27 June 2014.