Tax Free Childcare Top 10 Facts

The government recently consulted on a proposed new scheme to help parents who work with the cost of their registered child care. The plan will be presented in the fall of 2015. Here is a summary of the 10 best known facts about "Tax free childcare."

• Tax free childcare will have an estimated value of £ 750m and is scheduled to be introduced in autumn 2015, although the exact date has not yet been confirmed.

• Families who are eligible for the new scheme will receive up to £ 1,200 per year for each child, up to a maximum of 20% of their total child care costs.

• Parents will open an online voucher account and the Government will recharge their payments.

• To qualify for 'Tax free childcare', both parents, or one of the parents of a single parent family, must work and each must earn less than £ 150,000. This means that two parents with a joint income of £ 299,999.98 will remain eligible.

• The scheme will initially only apply to parents with children under five, but it will accumulate over time to include all children under 12.

• The new scheme will replace the current Child Care Voucher scheme after general elections in 2015. Parents who currently claim Child Care Vouchers may remain in the scheme if they choose, but after the new scheme is launched, the Existing The child care voucher program will be closed to new participants. Itis not possible for parents to receive both.

• Under the current ChildCare Voucher scheme, a basic rate taxpayer can generally earn around £ 900 per year in taxes and savings on National Insurance. Where both parents work and can take advantage of the scheme, families can save up to £ 1,800 a year.

• Childcare vouchers are available as an employee benefit for parents whose employer chooses to offer the plan. Employers are not required to offer the current scheme. 'Tax free childcare' is expected to be open to all parents who work and meet the criteria.

• The new scheme will also be offered to parents who are self-employed, who are currently unable to make use of childcare vouchers.

• Families that claim tax credits and receive support through the new Universal Credit, which will be presented in stages until 2017, will not be eligible for Tax Free ChildCare. Parents who receive Universal Credit, where both parents work and earn more than the personal tax allowance (which should reach £ 10,000 in 2015) may claim up to 85% of their child care costs. Parents with universal credit who do not earn this amount will be eligible for only 70% of child care costs.

Employers can enroll in the current child care voucher scheme now to make sure they are making child care savings available to their employees, and they will also save on their employers' national insurance contributions. Some parents will be better off with the existing Child Care Voucher scheme, so they must register now to protect their savings in the future, even if they are not currently paying for child care. Employers For Childcare can provide parents with information about the scheme in which they will be better.