Get ready for childcare support changes

/ Posted By - Bradleys Accountants / Categories - Advice for Small Businesses

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.

What’s happening?

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.

Who’s affected?

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).

Who’s 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.

    Subscribe to our newsletter

    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.

    Related Articles

    Why are small businesses not using accounting…
    | Advice for Small Businesses

    All over the internet there’s advice on why businesses should switch to accounting software, particularly if they want to transition smoothly … Read more

    Download: Your Budget summary report & new…
    | Advice for Small Businesses

    Yesterday Philip Hammond delivered the 2017 Spring Budget speech of this Government. So what exactly did the Chancellor say and, more … Read more

    Spring Budget 2017 – key points for…
    | Advice for Small Businesses

    Today saw the unveiling of Hammond’s first – and last* – Spring Budget Statement, bringing with it as always tax changes, … Read more

    X

    Subscribe to the newsletter

    Know about latest accountancy updates, company news and business growth tips. Every month, in your inbox

      Subscribe to our newsletter