Consultation on new Tax-free Childcare scheme

09 August 2013

The Government has launched a consultation on the details of its new Tax-free Childcare scheme, which is set to come into effect in 2015.

The scheme aims to offer working families assistance with the cost of childcare, and will apply to those families where each parent is in work and earning under £150,000, and not already receiving support via tax credits/Universal Credit, or the existing Employer Supported Childcare scheme.

Under the proposals, parents who are on paid maternity, paternity or adoption leave will continue to receive Tax-free Childcare for any existing children, while couples where one parent is in work and the other receives Employment and Support Allowance or Carer's Allowance will also be eligible.

The scheme will be operated via online voucher accounts, and will cover 20% of a working family's childcare costs up to a limit of £6,000, equating to £1,200 per child per year.

The scheme will begin in Autumn 2015 and will be phased in, applying initially to children born during or after September 2010 and will eventually extend to children under the age of 12.

The Tax-free Childcare scheme is expected to apply to up to 2.5 million families once it is fully operational. The Government is also consulting on an additional £200m of childcare support that will be made available from April 2016, for working families in receipt of Universal Credit.

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