A new childcare scheme will be introduced in autumn 2015 that provides parents with savings of up to £2,000 per child, per year. There is no limit on the number of children that can be claimed for. The scheme will be available for children under 5 to begin with, and for all children under 12 within the first year.
How will the scheme work?
The government decided that HM Revenue & Customs (HMRC) will deliver tax-free childcare in partnership with National Savings and Investments (NS&I). The government will be a single point of contact for parents to register for the scheme, make payments into the parents’ account, and arrange payments to their childcare provider(s). Savings will be held in an online account and 20% will be added by the government to contributions made by the account holder/s. For a parent claiming the full £10,000, he or she will pay £8,000, with the government contributing £2,000.
Who will benefit from tax-free childcare?
- Single, employed and self-employed parents (not including those who earn over £150,000 per annum)
- Couple, both employed
- Couple, one employed and one self-employed
- Couple, both self-employed
Tax-free childcare will not be available to couples in which one parent is unemployed or to single parents who earn over £150,000 per annum or are unemployed.
Those signed up to an existing childcare voucher scheme will have the option to continue purchasing vouchers or move to the new scheme. This means they will be able to decide which option is more advantageous to their circumstances.
Employers will not be able to set up a new childcare voucher scheme after August 2015; however if there is an existing scheme in place, employees will be able to continue ordering childcare vouchers until it is phased out.
For more information on the new tax-free childcare scheme or any payroll matter please contact Neil Cameron, Payroll Manager at email@example.com or on 0131 558 5800.