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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'

Parents pay more than a quarter of salary on childcare

Children in a nursery. Credit: PA Wire

In the last five years the price of part-time nursery care for a child under two has risen by 27%, with parents paying around £1,214 more in 2014 than in 2009 according to a new report.

These figures come from a Family and Childcare Trust report which says that families are paying more on average for part-time childcare than they spend on their mortgage.

For a family with two youngsters in full-time childcare the average yearly cost is £11,700, the report adds, 62% higher than the average yearly mortgage bill for a family home.

The study says that since 2002, childcare costs have risen more than inflation each year and that international data shows that parents in Britain hand over more than a quarter of their salary (26.6%), more than most other European nations.

More: Childcare costs 'outstrip mortgage payments'

Childcare costs 'outstrip mortgage payments'

A file photo of a child playing. Credit: Dominic Lipinski/PA Wire

Families are paying more on average for part-time childcare than they spend on their mortgages, according to a new report.

It reveals parents are handing over more than £7,500 a year for childcare for two children, around 4.7% more than the average mortgage bill.

The report, by the Family and Childcare Trust, also suggests that some families maybe spending more on childcare than they do on their weekly shopping

It found that a family with one two-year-old child attending nursery part-time (25 hours a week) and a five-year-old in an after-school club will pay out £7,549 a year on average.

This is higher than the UK average annual UK mortgage, which the report says is £7,207 according to official data.

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