Policy News Journal - 2014-15

The Government’s response to the technical consultation on draft secondary legislation for the Childcare Payments Act contains some changes to Tax-Free Childcare.

The Response to the technical consultation on draft secondary legislation for the Childcare Payments Act outlines some changes to Tax-Free Childcare as follows:

 The 7-day window in regulation 9 of the Eligibility regulations during which a person could apply for a childcare account in anticipation of starting work will be increased to 14 days.  Regulation 9 has been redrafted to allow self-employed individuals to calculate their income over a tax year, if they wish to do so to address concerns over fluctuating earnings.  Regulations have been redrafted so that a person will not have to meet the requirements to be in paid work while on Shared Parental Leave. Other minor amendments have been made to ensure legislative consistency.  Legislation will be introduced to increase the maximum amount that parents of disabled children can pay into their childcare accounts, in recognition of the higher childcare costs these families incur. For accounts for disabled children, the maximum payment for a standard three month entitlement period will be doubled to £4,000. This means that a parent with a disabled child will be able to pay up to £16,000 into their childcare account per year and receive top-up payments of up to £4,000. Background At Budget 2013, the Government announced the introduction of a new scheme, Tax- Free Childcare, designed to provide financial support to help working families with the cost of childcare. More specifically, the new scheme aims to support parents in their decision to take up paid work, or increase their existing working hours, should they wish to do so. The scheme will be based on a system of childcare accounts. Eligible parents will open an online account into which they will pay money. The Government will then automatically top up amounts in the account at a rate of 20p for every 80p paid in by the parent. The amounts held in the childcare accounts will have to be used to pay for qualifying childcare which enables the parent to work. Government support will be up to £2,000 per child per year. Parents will be able to have one childcare account for every qualifying child. A child will qualify for the scheme until the first week in September following their eleventh birthday or, for disabled children, until the first week in September following their sixteenth birthday. Legislation to enact the new scheme received Royal Assent on 17 December 2014. The Act provides the overall structure of the scheme and the way in which it will operate. It also contains a number of delegated powers to be exercised by regulations made by statutory instrument which will set out some of the detailed rules of the scheme. The redrafted regulations are subject to Parliamentary approval.


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CIPP Policy News Journal

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