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| Childcare support: what does it mean for you? | Childcare support: what does it mean for you? |
| (5 months later) | |
| Parents will be eligible for new tax-free childcare support worth £1,200 a year under a scheme outlined by the Treasury on Monday. At the moment the scheme is still being designed and parents have been invited to comment on the proposals. Here we look at what it will mean for families. | Parents will be eligible for new tax-free childcare support worth £1,200 a year under a scheme outlined by the Treasury on Monday. At the moment the scheme is still being designed and parents have been invited to comment on the proposals. Here we look at what it will mean for families. |
| How will the scheme work? | |
| From autumn 2015 parents will be able to buy vouchers online to pay for childcare. For every 80p they spend, the government will add 20p. The scheme is available for up to £6,000 of childcare costs per child each year – the parent will pay £4,800, while the government gives a £1,200 subsidy. The vouchers can only be used to pay for Ofsted-regulated childcare, so not for care provided by friends or relatives. The government claims the cap exceeds the average cost for 25 hours of childcare for a child under two. | From autumn 2015 parents will be able to buy vouchers online to pay for childcare. For every 80p they spend, the government will add 20p. The scheme is available for up to £6,000 of childcare costs per child each year – the parent will pay £4,800, while the government gives a £1,200 subsidy. The vouchers can only be used to pay for Ofsted-regulated childcare, so not for care provided by friends or relatives. The government claims the cap exceeds the average cost for 25 hours of childcare for a child under two. |
| How old do my children have to be for me to qualify? | |
| Initially the scheme will only cover childcare for the under-fives and for disabled children aged up to 17, but it will eventually be extended to include children up to the age of 12. The age limit will be increased each year, so in the second year children aged up to six will qualify, in the third year children aged up to seven and so on. If your child was born after the autumn of 2015, you should qualify. | Initially the scheme will only cover childcare for the under-fives and for disabled children aged up to 17, but it will eventually be extended to include children up to the age of 12. The age limit will be increased each year, so in the second year children aged up to six will qualify, in the third year children aged up to seven and so on. If your child was born after the autumn of 2015, you should qualify. |
| How many children can I claim for? | How many children can I claim for? |
| The Treasury says the scheme will be available for each child aged up to 12 – there doesn't seem to be a limit on the number of children. | The Treasury says the scheme will be available for each child aged up to 12 – there doesn't seem to be a limit on the number of children. |
| Can I claim even if I am a 40% taxpayer? | |
| Yes. Although many higher rate taxpayers have been hit by the child benefit changes that mean payments are clawed back if one parent earns more than £60,000 a year, in this scheme they qualify for the same amount of government help as lower earners. | Yes. Although many higher rate taxpayers have been hit by the child benefit changes that mean payments are clawed back if one parent earns more than £60,000 a year, in this scheme they qualify for the same amount of government help as lower earners. |
| One of the controversial aspects of the scheme is that it will be available to all parents earning up to £150,000, when the 50% tax rate kicks in. This means the government will be subsidising childcare for couples earning up to £299,999.98 between them. | One of the controversial aspects of the scheme is that it will be available to all parents earning up to £150,000, when the 50% tax rate kicks in. This means the government will be subsidising childcare for couples earning up to £299,999.98 between them. |
| How about if I receive other benefits? | |
| Parents who receive support through tax credits or, later, the universal credit will not be able to use the vouchers. Instead the government will meet 85% of the costs of childcare for parents on universal credit, provided that both parents are working and earn more than the personal tax allowance, which is due to reach £10,000 by 2015. | Parents who receive support through tax credits or, later, the universal credit will not be able to use the vouchers. Instead the government will meet 85% of the costs of childcare for parents on universal credit, provided that both parents are working and earn more than the personal tax allowance, which is due to reach £10,000 by 2015. |
| My partner doesn't work – do we still qualify? | |
| Not unless they are a carer and receive Carer's Allowance, or they receive contributory Employment and Support Allowance. Where this isn't the case, in a couple both parents have to be working in order for the family to qualify; in single-parent families the lone parent must have a job. This is different from the current voucher scheme where help can be claimed even if only one of two parents is employed. | Not unless they are a carer and receive Carer's Allowance, or they receive contributory Employment and Support Allowance. Where this isn't the case, in a couple both parents have to be working in order for the family to qualify; in single-parent families the lone parent must have a job. This is different from the current voucher scheme where help can be claimed even if only one of two parents is employed. |
| What if I take maternity leave? | |
| If you qualify for the scheme before taking maternity or paternity leave or any other kind of paid parental leave you will continue to be eligible while you are not working. | If you qualify for the scheme before taking maternity or paternity leave or any other kind of paid parental leave you will continue to be eligible while you are not working. |
| Is this worse than the existing voucher scheme? | |
| The voucher scheme, or Employer Supported Childcare scheme, allows parents to sacrifice part of their salary in exchange for childcare vouchers – effectively, this means they are paying for part of their childcare tax-free. The vouchers are worth up to £55 a week, or £243 a month The saving in tax and national insurance contributions adds up to £933 a year. Because both parents can claim, the total saving can be almost £2,000 a year. This is regardless of how many children you have, so it looks better for single-child families, but worse for those with more children. | The voucher scheme, or Employer Supported Childcare scheme, allows parents to sacrifice part of their salary in exchange for childcare vouchers – effectively, this means they are paying for part of their childcare tax-free. The vouchers are worth up to £55 a week, or £243 a month The saving in tax and national insurance contributions adds up to £933 a year. Because both parents can claim, the total saving can be almost £2,000 a year. This is regardless of how many children you have, so it looks better for single-child families, but worse for those with more children. |
| The scheme is only offered by around 5% of employers and can be quite complex. The government says just 450,000 families claim it, while the new scheme will eventually reach 2.5 million households. | The scheme is only offered by around 5% of employers and can be quite complex. The government says just 450,000 families claim it, while the new scheme will eventually reach 2.5 million households. |
| Will the voucher scheme stop? | |
| Not entirely. If you are a member and want to continue to use the scheme until your child reaches 15 you can – but only if you stay with the same employer. Workers can continue to sign up until the new scheme is introduced, but it will be phased out and the cash diverted to supporting the new policy. This means that eventually there will be no support for parents of children aged between 12 and 15, except where the child is disabled. In that case, support will continue until they turn 16. | Not entirely. If you are a member and want to continue to use the scheme until your child reaches 15 you can – but only if you stay with the same employer. Workers can continue to sign up until the new scheme is introduced, but it will be phased out and the cash diverted to supporting the new policy. This means that eventually there will be no support for parents of children aged between 12 and 15, except where the child is disabled. In that case, support will continue until they turn 16. |
| Parents will not be able to claim vouchers under both systems at the same time, so you will need to make a choice. | Parents will not be able to claim vouchers under both systems at the same time, so you will need to make a choice. |
| How do I have my say? | How do I have my say? |
| If you want to comment on the proposals you can respond to a questionnaire which is running online until 27 September. The survey asks about the practicalities of operating the scheme and how you think you might use it as well as giving you chance to comment on the terms and conditions the government is proposing. | If you want to comment on the proposals you can respond to a questionnaire which is running online until 27 September. The survey asks about the practicalities of operating the scheme and how you think you might use it as well as giving you chance to comment on the terms and conditions the government is proposing. |
| • Read more: How to cut your childcare costs | • Read more: How to cut your childcare costs |