You may be aware that the Government have made an announcement today, following their consultation last year on Tax Free Childcare.
· Tax Free Childcare will be introduced from Autumn 2015, as originally planned.
· The Government Subsidy remains at 20%, but has now been increased to childcare costs of £10,000 per child per year, rather than the original plan of £6,000. This will enable parents to save up to £2,000 per year, per child.
· The Government originally planned to provide for children up to the age of 5 and increase per year until age 12. They have now confirmed that children up to age 12 will be included within the first year from Autumn 2015.
· Employees earning £50 per week, on leave (maternity, paternity, adoption, sick) who do not currently meet the requirement can receive the subsidy.
· New online Tax free Childcare accounts will be run by HMRC in partnership with NS&I, requiring all systems to be developed in their entirety before launch in Autumn 2015.
· Where families have an additional rate tax payer, or are receiving support through Tax Credits, no subsidy will be provided.
Many parents may be better off with the current Employer Provided Childcare Scheme available through your Employer. You can save up to £933 per year of your childcare costs, per employee, by joining the scheme now. The Government have confirmed that if you have joined the scheme before Autumn 2015 you will be able to continue to receive benefit for as long as you and your employer participate in this benefit. No new joiners will be allowed from Autumn 2015, when Tax Free Childcare is introduced. A number of companies were involved in the consultation and it was clear that many employers sought a role in the new policy. Currently it is anticipated that the new Tax free childcare programme will provided separately to any benefits programmes run through your employer.
Please click here
for the Government's response to the Consultaion about tax free childcare
We will keep you informed of any further updates.
For further details about Tax Free Childcare, please contact HMRC on 0300 200 1919.