The new tax-free childcare scheme
Almost 2 million families will be able to make use of the tax-free childcare scheme announced in the last Budget, according to estimates.
Tax-free childcare scheme
Under the scheme, eligible families will be able to claim a 20 per cent rebate on their childcare costs up to a limit of £2,000 per child.
Putting the scheme in context, the Government pointed to research that showed that nearly a quarter of employed mothers would increase their working hours if they could arrange good quality childcare that was convenient, reliable and affordable.
Comparisons with the Childcare Voucher Scheme
While many parents will benefit from the new arrangements, others will be worse off, but it will depend on personal circumstances. For instance, a working couple with one child paying around £5,000 a year for childcare will be worse off, but with two children they will do better.
Commentators noted that when only one parent in a couple works, neither will be eligible for the new scheme, but couples with joint incomes up to £300,000 will be.
Research has found that nearly nine in ten employers currently offer childcare vouchers to staff, which are reported to be used 'more intensively' by working lone parents than by couples.
Unlike the existing Childcare Voucher Scheme, the new scheme will not support parents of children aged between 12 and 15, unless the child is disabled. But employees will be able to use the existing voucher scheme until their child reaches 15 if they stay with the same employer.
Until the new scheme comes into force in autumn 2015, it will still be possible to sign up to the current voucher scheme. However, it will not be possible to claim under both systems.
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