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BUDGET BRIEFING 2013
This afternoon the Chancellor, George Osborne, announced what he called his “budget for an aspiration nation”. Changes to childcare vouchers that we announced yesterday.
New childcare scheme from Autumn 2015 - as announced yesterday a new childcare scheme will be introduced to support working families with their childcare costs. For childcare costs of up to £6,000 per year per child, support of 20% will be available worth up to £1,200. From the first year of operation, all children under 5 will be eligible and the scheme will build up “over time” to include children under 12. The scheme will provide support for families where all parents are in work and not receiving support through the Childcare Element of Working Tax Credits/Universal Credit, or where one parent has an income over £150,000. Support will be provided through a childcare account redeemable through any registered childcare provider. Important points to note include:
- The new scheme will commence in Autumn 2015 (running alongside existing childcare voucher schemes for a while as the current system of Employer Supported Childcare is phased out).
- Both parents must be working for the new benefit to be claimed by the household.
- The benefit (or relief) can be claimed per child, rather than per household.
- Initially, this new scheme will cover children up to the age of 5 only.
- The parent will continue with an online voucher account, which the Government will top-up.
- The scheme will continue to be for registered childcare only.
Comment: there will be a messy period where the two schemes run side by side and it will be confusing for employers and employees alike. This will also impact employers who will lose national insurance savings when the new scheme is no longer run on a salary sacrifice basis.