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£1,200 childcare cost pledge

Families are to receive up to £1,200 a year towards childcare costs from 2015. The pledge will reportedly only apply to families in which both parents work and earn less than £150,000 a year. The Budget will be announced on Wednesday.

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More than two million families could gain from childcare scheme

More than two million working families stand to gain through a major expansion of government support for childcare.

Can the new childcare scheme please everybody? Credit: Owen Humphreys/PA

Under tax-free childcare plans, set out on the eve of the Budget, eligible families will receive up £1,200 a year for each child - to a maximum of 20% of their annual costs.

However the new scheme, which will replace the existing employer supported childcare programme (ESC), will not come into effect until late 2015 - after the next general election.

In order to qualify, both parents will have to be in work - or the one parent in the case of lone parent families - and each parent must be earning less than £150,000-a-year.Initially it will cover children up to five years old, but will build up "over time" to include children under 12.

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