Why it is vital for you to plan your new childcare support scheme in advance.
For Kent residents and working parents across UK, there are going to be some important changes to childcare support which will impact their tax planning.
The government had outlined the details of a new childcare scheme in the 2013 budget. Briefly, the new scheme will offer support equal to 20% of childcare costs on a maximum spend of £6,000 a year, i.e. up to £1,200 a year for each child. The current employer-supported childcare voucher scheme will be phased out and it’s advised you switch to the new scheme.
When’s does it apply?
The scheme will be phased in from autumn 2015.
The scheme is available to families where both parents are in work or one for single-parent households, provided no parent earns more than £150,000 a year. If you are an existing member of the employer-supported voucher scheme, you will be able to choose whether to remain in it or switch to the new scheme (if you are eligible).
Children under five will be eligible for support as of now but over time the scheme will include all children under 12. Disabled children will get support till they are 16.
What’s not available?
The scheme is not available to parents who receive support through tax credits or universal credit and lacks horizontal equity for those households with six-figure incomes. Potentially, it is a benefit for middle income households that earn around £30-40,000, and claim tax credits or universal credit, and receives some support for their childcare costs through that route. Many families will lose out in other ways, for example, a couple who both pay basic rate tax and have one child can currently get just over £1,800 in support through the childcare voucher scheme. Under the new plans this will fall to £1,200.
A significant difficulty for claimants would be carrying out the complicated set of calculations to determine under which scheme you will be better off. We urge all working parents in Welling and surrounding areas to prepare for these changes.
Profile: Alan McCappin is the Practice Manager of Bradleys Accountants Limited, a Welling based firm of accountants serving business, contractor and inpidual clients with a range of professional accountancy services.