Tax-free childcare scheme - what are the government's plans?
Thursday 12th February 2015
Earlier this week the government announced plans to boost the help available to parents with disabled children under the new tax free childcare scheme launching in Autumn 2015.
This is a good result for our Counting the Costs campaign, which is calling for the government to increase help towards childcare costs.
Derek Sinclair, our welfare adviser, explains what the government's announcement will mean for parents with disabled children.
What is the tax free childcare scheme?
It is replacing the current employer supported scheme where some parents get childcare vouchers from their employer.
Top-up payments from government
The scheme involves parents buying childcare via online childcare accounts. For every 80p that a parent pays into their childcare account, the government will contribute a top-up payment of 20p.
There is a maximum amount that can be paid into an account. This cap is usually £10,000 per year (£8000 from parents + £2000 in government top-up payments).
This cap disadvantages families whose childcare costs are more than £10,000, as they don't receive top-up payments towards any childcare they pay in excess of that figure.
Boosting the help available for disabled children
The government has agreed to double the amount that can be paid into a disabled child's childcare account to £20,000 a year (£16,000 from parents + £4000 in government top-up payments).
This important concession recognises the fact that many families with disabled children have higher than average childcare costs.
What are the eligibility rules?
The scheme applies to childcare costs for children under 12 years, or under 17 if the child is disabled (for example, on DLA or PIP or registered blind). Only registered or approved childcare costs can be met.
To be eligible all parents living in the household must normally be working (including self-employment) and have earnings of at least £50 per week. It will also be open to couples where one parent works and the other gets Carer's Allowance.
The scheme will not apply to those who get help with childcare via tax credits or Universal Credit or to families where someone earns more than £150,000.
What if I already receive childcare vouchers?
You won't be able to join an employer supported scheme once the new tax free childcare scheme starts.
If you are already part of an employer supported scheme, you will have the choice between continuing to get childcare vouchers from your employer or moving to the new scheme.