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Working parents to be given tax relief on childcare costs

Today it has been widely reported in the news that the new budget will include tax relief for working parents on their childcare costs.

But what does it mean and is it enough?

Firstly it only applies to families where both parents are working or single parent families where the single parent is working. Secondly it doesn’t come in until September 2015 when it will only apply to 1.3 million under 5’s (gradually phased to include under 12’s).

In basic terms it means that if you do not benefit from tax credits and earn £150,000 or below (each) *swoons* you will get 20% towards the cost of your childcare which is equivalent to the basic rate of tax now. This is up to £6,000 per child per year.

Some of you working parents might already claim tax relief and help with your childcare costs through childcare vouchers which are funded by the tax payer. This will be closed to new entrants in 2015 and phased out. We will all use the new scheme. This isn’t bad news though as it will be open to many more families to benefit from the support of tax relief on childcare costs, around five times more families will be eligible. And for a family with two children, it be worth more than double the amount of a single claim for workplace childcare vouchers. So do not worry about your childcare vouchers and the scheme being phased out.

The proposal (which is under consultation) is that you will have an online account (like your childcare voucher scheme one now if you have one) where you will pay money in direct from your salary and the Government will top this up. From there you will be able to pay your childcare provider.

The scheme isn’t confirmed yet and will be discussed tomorrow in the budget unveiling.

It is a nod to working families and the benefit they bring to the economy. In my opinion it also nods to how blimmin’ hard it is to juggle your childcare costs even if you have two decent salaries. Those of you who have childcare costs will know. It is heart breaking to see your hard earned cash going straight out each month and it’s understandable why some women have no choice but to stay at home, even if they want to work.

We are missing a lot of women who want to work from the workplace because of the enormous cost of childcare and I hope this will help mummies who do want to work. It is gobsmacking how much our childcare costs are and how much higher they are than other EU countries. The UK pay out a whopping 43% of their salaries to provide care for their children compared to 9.1% in Germany and 14.8% in France (Daily Mail).

The Government have already mentioned their support of help with childcare including extending the free entitlement to provide 15 hours a week of free early education and childcare for all three and four-year-olds and extending 15 hours of free childcare a week to 40 per cent of two-year-olds from 2014-15. But is this even happening?

Why is it taking so long when we need the help now? Working families find it hard too and what about the women who want to work but can’t?

Another two and a half years for under 5’s is too far off for many families. Is it too little too late? Working parents need help with their childcare costs now and will need more help in two and a half years time.


Information taken from Daily Mail  and the Guardian all opinions expressed are my own. 



3 thoughts on “Working parents to be given tax relief on childcare costs

  1. You’ve explained it so well, I’ve heard snippets on the news but it all seemed a bit confusing! I stay at home because both sets of grandparents love overseas, with childcare costs id have bought home about £100 even if part time was even an option, which with my employer it wasn’t, paying for childcare for 1 child, let alone 2 would have been obscene!

    1. i guess it depends on your situation and it affects everyone differently. But agree it does little to address the issues of being a working parent. Thanks for your comment

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