Childcare tax scheme to be 'more generous' than expected

A childcare tax break for working parents will be worth £2,000 per child, instead of the £1,200 initially proposed, and will be extended to under-12s more quickly, the Government has announced ahead of Wednesday's budget speech.

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Clegg: Childcare scheme built 'for working families'

The childcare tax break announced by the Government is designed "for working families", the Deputy Prime Minister told Daybreak.

Nick Clegg said the Government "had never hidden" that tax breaks worth £2,000 per child were targeted at working parents, as opposed to families with one adult staying at home to look after their children.

"It is important I think to provide support to those parents who are working or maybe want to work more to allow them to do so. This of course will give them that extra bit of support so if they want to work some more, they can indeed do so."

'85% of childcare costs' covered for benefit claimants

The bulk of childcare costs for 300,000 families on Universal Credit will be paid for, the Coalition has announced.

David Cameron
Tax free childcare was part of the Coalition's long-term economic plan. Credit: PA

The Government pledged to increase free childcare for some of the UK's poorest families by raising the amount they would cover from 70% to 85%.

Children's charity Barnardo's hailed as a "double victory" for the poorest families, while Prime Minister David Cameron said the move would "help millions".

Details of how that would be funded "from within the Universal Credit programme" would be set out at the time of the Chancellor's Autumn Statement, Number 10 said.

Labour: Childcare tax break 'too little too late'

Labour has blasted the Government's extension of working couples childcare tax break and says its introduction after the 2015 general election will be "too little, too late".

Shadow minister for children Lucy Powell explained:

David Cameron has cut support for children and families by £15 billion since he came to office.

And today he confirms that no help will arrive until after the election. This is too little too late.

Of course any childcare support is welcome but this Government has done nothing in this Parliament to help parents experiencing a cost-of-living crisis.

Childcare costs have spiralled by 30% since 2010 and the Tories have rejected Labour's plan for 25 hours' free childcare for working parents of three and four year olds.

– Lucy Powell

Read: How the childcare tax break will work

How the childcare tax break will work

  • Parents will be excluded from paying the basic rate of income tax of 20% on childcare costs of up to £10,000 - up from the proposed £6,000.
  • Self-employed and part-time workers will be covered by setting the lower earnings threshold at £50 per week.
  • The existing voucher scheme will continue for those already using it but be closed to new entrants.

Read: Govt extends childcare tax break to include under-12s

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Govt extends childcare tax break to include under-12s

A tax break for working parents trying to meet childcare costs will be more generous than expected and include all children under the age of 12, the Government has announced.

Read: Affordable childcare 'could save £1.5billion a year'

Childcare
The childcare scheme is for families with two working parents. Credit: PA

The new scheme will be worth £2,000 per child, instead of the £1,200 that was first proposed and will be brought in by the Autumn of 2015.

Announced just ahead of Wednesday's annual budget speech, the Government will extend the cut off age from five-years-old to include all children under 12.

Around 1.9 million families could benefit, twice as many as under the present voucher scheme which is only available where adopted by an employer.

But the policy has faced criticism for excluding couples where one parent does not work and being available to high-earning households with a joint income of up to £300,000.

Read: Childcare costs 'outstrip mortgage payments'