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Employer Supported Childcare

Employer supported childcare
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The employer supported childcare scheme looks set to be replaced in 2015 with the new tax-free childcare system which will see working parents with children under the age of five (or under 17 if they are disabled) getting money toward the cost of childcare, up to £1200 per child per year, which will look like a government payout of 20p for every 80p you give to childcare providers.

How will the employer supported childcare scheme work?

The scheme will be open to all parents provided they earn less than £150,000 a year each regardless of whether they are self-employed. It is likely that the upper age limit for the child will be raised over time to include those with children under the age of 12 but for now when the scheme goes live after the next general election it will only be open to parents with children under five.

It replaces the current voucher scheme which at the moment is only open to working parents who’s employer is signed up to the scheme and is not available to the self employed. It is not clear yet how long the voucher scheme will run parallel to the new tax-free option but what is clear is that not all parents will benefit from the change. You are most likely to benefit if you are a single parent whether self employed or actively employed or if you are a couple that are both self employed, whereas if you are a couple where both are employed or where one of you is employed and the other is unemployed you would be better off on the current voucher scheme. You will also be better off on the voucher scheme if you are in the top band of tax payers in the country as the new tax-free initiative will not take into account the higher rate you pay as a high earner, whereas the voucher scheme was indiscriminate on this area.

Childcare

The government has said that the old voucher system will not be affected by the new scheme as there will inevitably be those who feel their pockets lighten as a result of the new scheme, the big question is of course how long will they continue to allow the two schemes to coexist and at what point will couples where only one person works, who are the clear losers of the scheme, be supported in the same way others are when it comes to childcare payments. The scheme is likely to work by offering parents an online voucher account which they can use toward Ofsted regulated eduction centres in the UK with payments being topped up by the government.

It is likely to simplify a very complicated system which at the moment is not as inclusive as it should be, however it isn’t yet clear how these vouchers will affect your tax credit eligibility going forward and as with most government schemes we may be yet to see the major pit falls that are set to come out of the change.

 

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About Steven Petter

About Steven Petter

Steve has three children, Connor, Harmony-Skye and Fletcher. He is a Martial Arts enthusiast as well as an avid reader of books about Philosophy, he began writing short stories and also writes music reviews.

Website: Steven Petter

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