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More Childcare help for working parents

More childcare help for working parents
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Childcare costs are a drain on many people’s resources but families with working parents are set to notice a reduction in the amount of money they fork out for childcare due to a government scheme scheduled to come into place this year.

The Childcare Payments Bill will allow working parents to claim up to £2,000 per year for each child. Around 1.9million families are expected to be eligible for the new scheme, which will pay for around 20% of childcare costs.

Childcare support

Education Secretary and Minister for Women and Equalities Nicky Morgan said: “Tax Free Childcare will give parents the opportunity to return to work, should they choose to, and offer childcare support to groups of people that previously didn’t qualify, such as the self employed, and those that work for smaller firms.”

The new payments will only be available to families in which both parents are working and earn less than £150,000 a year. Those who receive Tax Credits or Universal Credits will not qualify for the extra payments.

Tax-free help

For the first time the self-employed and employees of smaller firms that don’t offer Employer-Supported Childcare will be able to claim tax-free help to pay for nurseries and childminders. Newly self-employed parents can take advantage of a ‘start-up’ period during which they don’t need to earn the minimum requirement of £50 per week. Parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave will also be able to claim help with childcare costs.

More childcare help for working parents

How will it work?

From autumn 2015 parents will be able to open an online account. Money paid into it will be used to pay for childcare with a registered provider. The government will add 20p for every 80p deposited into the account. Grandparents or other relatives can also pay into the account and you can pay in as much as you like, for example to save for extra costs during school holidays. If your circumstances change or you stop paying for childcare you can withdraw any money you have paid in. If you do so the government will withdraw their contributions too.

Do I qualify?

To benefit from Tax-Free Childcare parents have to be in work and earning just over an average of £50 per week. The maximum earnings figure is £150,000 per year. Any eligible family can take part in the scheme as it doesn’t rely on employers offering it like the current system does.

Will I have to change from Employer-Supported Childcare?

If you are already registered for Employer-Supported Childcare you can continue with that scheme if you want to. As long as your employer carries on offering the scheme you will be able to use it. However, Employer-Supported Childcare will be closed to new entrants once the Tax-Free Childcare scheme comes into place. You will be able to switch to Tax-Free Childcare if you find it offers the best savings for your family.

The scheme, which will be delivered by HMRC, is due to be rolled out from autumn 2015 and will include children up to the age of 12 and disabled children up to 17.

 

 

 

 

 

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About Maria Brett

About Maria Brett

Maria is a freelance writer with over 10 years' experience producing content for a variety of publications and websites. When not working or looking after her two gorgeous sons, she can usually be found playing flugelhorn in a brass band, helping out at her local hospital radio station, shouting at the television while watching Formula 1, at the cinema or plonked on the couch with a cold glass of wine.

Website: Maria Brett

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