The Government has launched a consultation on a new tax-free childcare scheme. It is proposed the scheme will start in autumn 2015 for children up to the age of 5 and will be phased in over time to include children up to the age of 12.
The new tax-free childcare scheme will cover 20% (equivalent to the basic rate of tax) of working families’ childcare costs up to a limit of £6,000 per year per child. This equates to a maximum of £1,200 per child
The consultation document notes that the current childcare voucher scheme is offered by relatively few employers, is inaccessible to some employees and is linked to the parent rather than the child – this means no account is taken of the number of children in each family. To address some of this the proposed new scheme will not depend on participation by employers so will be open to all parents, whether employed or self-employed, and the parents themselves and the Government will make payments into voucher accounts.
The new scheme will allow salary sacrifice so the NICs advantage currently enjoyed by participating employers will no longer apply.
It is proposed that when the scheme is introduced, those employees already in employer-supported childcare schemes will be able to choose whether to continue in that scheme. However, all new participants after this time must join the new scheme.
The Government will work with employers to explore how the transition to the new scheme can best be effected and how employers can remain involved if they so wish.
The consultation can be found here. Comments on the consultation are invited by 14 October 2013.