by David Watkinson
THE government was originally planning to bring in a new on-line system of childcare support from this Autumn.
However, some childcare voucher providers raised a legal objection, but the Supreme Court has now ruled in the governments favour. The new scheme is now expected to start in 2017 and will provide up to 1.8m families across the UK with up to £2,000 of childcare support per year, per child, via a new online system.
The existing childcare voucher scheme will remain available to both existing and new claimants until the new scheme starts. After the new scheme starts, the current scheme will not be available to new entrants, but those already in a scheme will have a choice of remaining within that scheme, provided that it continues to be offered by their employer, or moving to the new one.
The key points of the new scheme are as follows:
* the scheme will cover all children up to the age of 12, and up to the age of 17 if the child has disabilities
* in order to qualify for the tax-free childcare, the parents will have to be in work, with average earnings of between about £50 and £2,885 per week, or £2,600 and £150,000 per year
* the tax-free childcare will be available to all employees and, unlike the current voucher system, will not be dependent on the employer making the scheme available
* the scheme will also be available to self-employed parents. There will be special rules for people starting up in business and there will be an initial period during which there will be no minimum income level requirement
* the scheme will be available to parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave
Anyone wishing to use the scheme will need to open an online account via the government website and make transfers to cover the cost of registered childcare. The government will then top these up with 20% of childcare costs up to £2,000 per child, or £4,000 if disabled, up to a maximum of £10,000 per year.
Where circumstances change, and the parent no longer wishes to pay into the account, it will be possible to simply withdraw any funds that have built up. However, where applicable, the government will also withdraw its corresponding contribution.
The scheme is designed to be as flexible as possible in respect of the timing and amount contributed. Therefore parents will be able to build up a balance in their account for when they need more childcare than usual, for example, over the summer holidays.
WatkinsonBlack are pleased to advise on these and other matters. They have considerable experience in all areas of taxation and businesss services, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
