Tax Free Childcare Changes

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The Government has published its responses to the consultation which ran in autumn 2014 on draft regulations relating to the tax-free childcare scheme due to be introduced from autumn 2015.

Changes are to be made in some areas as a result of the consultation, including:
• Extending the period before starting or returning to work when a childcare account for a new child can be opened. As initially drafted, individuals were able to set up an account 7 days before starting or returning to work. Responses to the consultation noted that this would create practical difficulties for people who would need longer than a week to put childcare arrangements in place, and the Government has confirmed that it will extend the period to 14 days;
• Allowing self-employed individuals to calculate their income over a whole tax year; and
• Increasing the maximum payments in respect of disabled children.
The Government has rejected suggestions that a childcare account should be available to individuals taking on voluntary, rather than paid, work. The response document notes that “it is important that taxpayers’ money is only used for childcare that enables paid work and the requirement will be applied flexibly and proportionately”.
Revised regulations have been laid before Parliament and will be approved in due course. Before the scheme is introduced later this year, the Government will also be making guidance available for both individuals and for those providing childcare. The response document specifically notes that there will be detailed guidance around the interaction of the new scheme with existing credits, including Universal Credit, to allow individuals to “make informed decisions”.