Childcare tax breaks! Worth up to £1,200

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Working parents earning up to £150,000 each are to get childcare tax breaks worth as much as £1,200 a year per child.

Initially, it will cover children up to five years old, but will build up “over time” to include all children under 12.

According to the MailOnline, this will save a typical working family with two children under 12 up to £2,400 a year. The scheme will be phased in from 2015 and for the first year will be open to 1.3 million families with children under the age of five.

Under the plan, parents will be eligible to receive 20% of their annual childcare costs, up to £6,000 a year. The Prime Minister called it “a boost direct to the pockets of hardworking families, in one of the biggest measures ever introduced to help parents with childcare costs”.

Tax breaks will only apply to couples where both parents are working, or single parents who are employed.

Britain has some of the highest childcare costs in the world, with many people with two or more children saying it does not make financial sense for both parents to work.

According to the Organisation for Economic Co-operation and Development, Childcare costs in Britain amount to 43 per cent of average incomes, compared with only 14.8 per cent in France, 9.1 per cent in Germany and 8.4 per cent in Denmark.

Nick Clegg said:”

Delivering tax-free childcare is the next step to ensuring all families can work and get on. The rising cost of childcare is one of the biggest challenges parents face and it means many mums and dads simply can’t afford to work. This not only hurts them financially, but is bad for the economy too”.

Although this scheme seems like a step in the right direction, struggling parents face a wait of at least two-and-a-half years for help with soaring childcare costs.

What are your thoughts on the scheme and its time-frame?

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2 thoughts on “Childcare tax breaks! Worth up to £1,200

  • March 20, 2013 at 7:17 pm
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    Well good news I guess, but what is exactly meant by ‘tax breaks’? I’d like to receive some clarification before I get too excited!

    Reply
  • March 19, 2013 at 1:14 pm
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    Anything we can do to make childcare more affordable to hard working parents has to be a good thing. I’m assuming that this will be in addition to the entitlement to childcare vouchers.

    As a nursery owner and mother of 2 young children I know how parents feel about the cost of childcare. However, it’s very difficult to cut costs that could be passed on to parents without adversely affecting childcare standards, which, at the end of the day, is what we will aim to protect and enhance above all else in the interest of the children registerd with us.

    Reply

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