Bringing up baby
Arranging childcare can be a costly business but the Government has promised extra relief for working families. The new Tax-Free Childcare scheme, first announced last year, is to be introduced in Autumn 2015 and will be more generous than previously anticipated, giving working parents up to £2k per child per year towards their childcare costs. And it will be available to far more parents than the current Employer-Supported Childcare regime.
Based on a Government document published - oddly - the day before the Budget, the new regime will work as follows:
1. Parents will open an online account with the Government (the regime will be delivered by HMRC and National Savings and Investments working in partnership);
2. The parents (and possibly others, including employers) will pay funds into the account;
3. For every 80p deposited the Government will put in 20p up to a maximum of £2k per child per year; and
4. The family can then use the funds in the account to pay for qualifying childcare.
The new regime is expected to be in place from April 2015 at which point the current Employer-Supported Childcare regime will be closed to new entrants.
Tax-Free Childcare is aimed at working families and so controversially) both parents must be either employed or registered as self-employed with HMRC. Also, there will be a minimum income level (£50 per week) and a maximum income level (£150k per year). The children must be under 12 (or 17 if they are disabled)
All in all, this is good news for parents with more relief available to more families. Perhaps bringing up baby won't be so costly after all!