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News - 6 August 2013

News on the Childcare voucher scheme

The government says it wants to expand a new childcare tax credit scheme to include parents who stay at home because they are carers.

The government has said the scheme will help 2.5m families, but Labour says families have seen a cut in support.

Chancellor George Osborne said the scheme - which will also include those on maternity or paternity leave - would give working parents "more choice and better access to the quality, affordable childcare".

When the scheme was announced, Prime Minister David Cameron said the plans, expected to cost £1.4bn, would be a "boost direct to the pockets of hard-working families

Details of the scheme will be set out following the consultation, but the new system is expected be phased in from autumn 2015, with children under five helped in the first year. The scheme will then build up over time to include all children under the age of 12.

Stuart Coleman, Manager of the Tax Department of ABDS comments:
“The UK has some of the highest childcare costs in the world, with many people with two or more children saying it does not make financial sense for both parents to work. To be eligible for the new support both parents will have to work - or one parent in the case of lone parent families - and each parent must be earning less than £150,000 a year. But in two-parent families where one parent does not work, families will not receive support. Critics say it will penalise stay-at-home parents.”

Under the proposal, parents will be required to open an online voucher account with a voucher provider and have their payments topped up by the government. For every 80p families pay in, the government will put in 20p, up to the annual limit of £1,200. The vouchers will be valid for any Ofsted regulated childcare in England and equivalent bodies in Scotland, Wales and Northern Ireland.

Half of the funding for the new scheme will come from the abolition of the previous system of employer-supported childcare vouchers - which is provided by only about 5% of employers - and in part by funding switched from elsewhere in Whitehall.

A separate scheme will provide funding for parents who claim universal credit. It will see the state will cover up to 85% of their childcare costs, up from 70% at present.

If you need any help and advice on Nursery Schools contact Peter Ham, Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
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