In the 2013 Budget measures the UK announced the introduction of tax free childcare for working families. The objective of the scheme would be to give the equivalent of basic rate tax relief for the costs of childcare. A consultation document has now been released with the objective of obtaining comments from interested parties on framing the details of the tax relief.
The 20% tax relief would be subject to a maximum limit of GBP 1,200 per child per year. The scheme would operate by allowing parents to register and open an online account with a voucher provider. Payments into this account would then be topped up by the government at the appropriate rate until the maximum contribution level was reached. A household in which all parents are working, but not receiving tax credits or the universal credit, would be eligible for the scheme, provided that no parent was paying tax at the additional rate. Equivalent support would be received by those households that receive tax credits or the universal credit.
The consultation gives interested parties a chance to comment on the details of the scheme. The government currently plans to start the scheme in the autumn of 2015. This gives time for the operation of the systems to be worked out by the government with the voucher providers and for detailed legislation to be drafted.
